Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2022 (2) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (2) TMI 1291 - AT - Income TaxTP Adjustment - addition made on determination of Arm’s Length Price (ALP) u/s 92 in respect of the international transaction of rendering licenced manufacturing services (Licensed Manufacturing Segment) by the assessee to its Associate Enterprise - HELD THAT:- We accept the prayer of the learned Counsel for the assessee and set aside the order of the AO and remand the issue for denovo consideration to the AO/TPO to carry out the exercise of determination of ALP in the licence manufacturing segment denovo. The AO/TPO will afford opportunity of being heard to the assessee in the set aside proceedings. The relevant grounds of appeal are accordingly treated as allowed for statistical purpose. Determination of ALP in respect of Information Service (IS) charges and corporate service charges Segment - The issue with regard to determination of ALP in respect of payment of IS charges should be set aside to the AO/TPO for fresh consideration denovo in the light of the submissions and additional evidence filed before us and these submissions and additional evidence go to the root of the matter. The AO and TPO will afford opportunity of being heard to the assessee in the set aside proceedings. Acquisition of companies by the Assessee on Merger - Depreciation on Goodwill was claimed on account of Acquisition of business by the assessee on merger and on Slum sale basis - HELD THAT:- Goodwill arising on amalgamation, in the hands of amalgamated company is an intangible asset in terms of Section 32(1)(ii) of the Act and thus eligible for depreciation under the Act. The issue whether Goodwill arising on amalgamation is eligible for depreciation or not, is no longer Res-Integra. Further, it is not disputed by the Revenue that the assessee paid consideration which is said to be in excess of the fair value of assets taken over. See SMIFS SECURITIES LTD. [2012 (8) TMI 713 - SUPREME COURT] Allowance of depreciation generated as a result of amalgamation in the hands of amalgamated company needs depper judicial scrutiny especially in the light of the intent of the legislature to keep amalgamation a tax neutral scheme for companies and not to provide any scope to derive undue tax benefits. In particular he drew attention to Explanation 7 to Sec.43(1) of the Act which provides that actual cost of the transferred capital asset to the amalgamated company to be the same as it would have been if the amalgamating company had continued to hold the capital asset for the purposes of its own business. When cost is not recorded of any goodwill in the amalgamating company, there can no cost or goodwill in the amalgamated company. It best can be nil in such a situation. Both the parties agree that the facts as brought out in the submissions made by the learned Counsel for the assessee before the Revenue authorities have not been considered either by the AO or the DRP and therefore this issue also needs to be remanded to the TPO/AO for fresh consideration. Accordingly, we set aside the issue to the AO for fresh consideration in accordance with law and in the light of the submissions made before the Tribunal. TDS u/s 194 - ‘Special Discounts’ to dealers who essentially its customers - AO disallowed the same under section 40(a) of the Act for failure to deduct tax at source, alleging that it is in the nature of commission, warranting deduction of tax at source - DRP confirmed the same, holding that special discount were rightly confirmed to be in the nature of commission since the assessee itself grouped the special discount under the head “commission” in its financials - HELD THAT:- We have given a careful consideration to the rival submissions and are of the view that the issue with regard to the question whether the payment in question is in the nature of discount or commission should be set aside to the AO/TPO for fresh consideration denovo in the light of the submissions made before us, the case laws cited and the real nature of the transaction and not to conclude only on the basis of entries in books of accounts and nomenclature used therein. The AO and TPO will afford opportunity of being heard to the assessee in the set aside proceedings. Short grant of tax credit - HELD THAT:- We are of the view that it would be just and appropriate to direct the AO to consider the claim of the assessee as made above and allow credit for TDS in accordance with law, after affording assessee opportunity of being heard.
|