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2019 (9) TMI 1065 - ITAT KOLKATATP adjustments - advertising, marketing and promotion expenses (AMP Expenses) - HELD THAT:- Transfer Pricing Officer (TPO) held that by incurring such expenses, the assessee has provided services to its Associate Enterprises (AE). Though a number of arguments were advanced by both the parties on this issue, the primary argument of the assessee is that, the transaction in question is not an international transaction. AMP Expenses cannot be regarded as an international transaction as per Section 92B of the Act, in the case of the assessee so as to invoke provisions of Section 92 of the Act. As we have held that the that the AMP expenditure in question is not an international transaction, the TP adjustment made in this regard is hereby deleted and these grounds of the assessee are allowed. TP adjustment with respect to research and training expenditure (‘R & T Expenditure’) - HELD THAT:- Assessee has not carried out any R&T activities. The expenditure in question is incurred only for its manufacturing operations and local environmental compliance from HSE perspective. The assessee submitted that ICT also does not carry out any research and development activities for development of any new project/technology. It is primarily a captive support centre for the local India operation of the assessee. Thus, we are of the considered opinion that the expenditure on research and training does not constitute any international transactions on facts. We also find that the TPO/AO has not considered this expenditure incurred in the earlier years towards R&T expenses, as international transactions. Thus, in view of the above discussion, we hold that the expenditure incurred on R&T is not an international transaction as per Section 92B of the Act, so as to enable invocation of provision of Section 92 TP Adjustment made with regard to the International Transaction pertaining to “Intra Group Services” - HELD THAT:- As Consistent with the view taken therein, as agreed by both the parties, we restore this issue to the file of the Assessing Officer, for fresh adjudication, in accordance with law. Accordingly, this ground of the assessee is allowed for statistical purposes. Provisions made for meeting liabilities is an ascertained liability - HELD THAT:- DRP on the ground that the provision was made based on data of past activities and on the ground that the provision was made in a systematic and scientific manner directed the Assessing Officer to allow the same by applying the propositions of law laid down by the Hon’ble Supreme Court in the case of Rotork Controls India (P.) Ltd. v. Commissioner of Income-tax, Chennai [2009 (5) TMI 16 - SUPREME COURT] Disallowance by the DRP, of normal depreciation and additional depreciation opertaining to Colour Soluble Machine - HELD THAT:- Colour solution machines, have rightly been classified as plant and machinery by the DRP. It correctly held that these are operational tools and cannot be called furniture and that the test must be as to whether these machines are owned by the assessee and have been used for the purpose of business of the assessee. These tests were satisfied for claim of depreciation as “plant and machinery” We find not infirmity in this order of the ld. DRP. Thus, we uphold the same and dismiss this ground of the revenue. Disallowance u/s 14A r.w.r. 8D - HELD THAT:- The assessee suo moto disallowed ₹ 7,61,500/- u/s 14A r.w.r. 8D, in its computation of income under the normal provision of the Act. The Assessing Officer enhanced the disallowance by ₹ 5,34,41,354/-. The DRP directed the Assessing Officer to follow the judgment of the Hon’ble Delhi High Court in the case of Cheminvest Ltd. vs. CIT [2015 (9) TMI 238 - DELHI HIGH COURT] and recompute the disallowance. Disallowance u/s 14A r.w.r. 8D while computing the book profits u/s 115JB - HELD THAT:- Directions of the DRP are that the Assessing Officer has to strictly construe Section 115JB of the Act and not to make a similar disallowance therein. See VIREET INVESTMENT (P.) LTD. [2017 (6) TMI 1124 - ITAT DELHI]
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