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2019 (3) TMI 1537 - AT - Income TaxTransfer pricing adjustment of Technical Assistance fees and project management services - capitalized as project not claimed as expenditure - Arms Length Price determination - TPO determine ALP at ‘Nil’ - HELD THAT:- It is an undisputed fact that the assessee has not claimed the expenditure toward payments of Technical Assistance fees and Project Management fees. The assessee has capitalized the same as the project was not complete in the period relevant to the assessment year under appeal. The capital transactions are outside the purview of Transfer Pricing mechanism. Having observed that, there is no denying the fact that in the subsequent years the assessee would be claiming depreciation on the cost of capital asset which would include payment of fees for Technical Assistance and Project Management. Therefore, determination of ALP of such services in the year of payment of such fees would be relevant. The Delhi Bench of the Tribunal in the case of Honda Motorcycle & Scooters India Pvt. Ltd. Vs. ACIT [2015 (4) TMI 502 - ITAT DELHI] has held that determining of ALP in respect of purchase of fixed assets is necessitated as in the subsequent years the value of transactions will have bearing when depreciation is claimed. TPO in the instant case at the outset had determined the services i.e. technical assistance and project management services at ‘Nil’ without determining ALP of the transactions, hence, we deem it appropriate to restore the ground No.1 and 2 of the appeal back to the file of TPO/Assessing Officer to ascertain the ALP of the transactions by adopting most appropriate method prescribed under the Act. The assessee is granted liberty to furnish necessary documents to further substantiate rendering of technical assistance and project management services by AEs to the assessee. Ground raised in the appeal by assessee are allowed for statistical purposes. Rectification of mistake u/s 154 with respect to the amount of fees paid for project management services - against Project Management Services the TPO has made upward adjustment of ₹ 1,54,78,224/- in respect of project management fees considering it as ‘Nil - HELD THAT:- It is not emanating from the orders as from where the TPO has picked the figure of ₹ 1,54,78,224/-. As per the contentions of the ld. AR the table at page 2 of order by TPO is from TP Audit Report. The TPO/ Assessing Officer is directed to look in to the discrepancies of the amount mentioned in table at page 2 and adjustment proposed by the TPO qua project management services and rectify the mistake, if any. Accordingly, additional grounds of appeal raised by the assessee are allowed for statistical purposes.
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