Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2016 (8) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (8) TMI 821 - AT - Income TaxTransfer pricing adjustment - mark up of managerial services post incorporation - mark-up on reimbursement of expenses - Held that:- The expenditure incurred by the assessee, when the A.E. of the assessee was not in existence cannot in our view be taken as a factor for determining the A.L.P. of an international transaction that took place between the assessee and its A.E. post incorporation. Just because, post incorporation NDTV Network Plc UK has reimbursed the employee cost incurred by the assessee prior to incorporation, to the assessee, it does not lead us to a conclusion that on other managerial services provided by the assessee to the A.E., no mark up should be charged while reimbursing the expenditure. The assessee in this case has itself worked out 12.29% as the ALP margin, in its Transfer Pricing Report. It is not controverted by the Ld.Counsel for the assessee that in the subsequent Assessment Years, the assessee itself has admitted a mark up on reimbursement of expenditure on these management services. In view of the above discussion, we are of the considered opinion that the TPO is right in making a mark up of managerial services post incorporation of the A.E. Thus we hold that: (a) There can be no mark-up on reimbursement of expenses incurred by the assessee prior to incorporation of NDTV Network Plc UK. (b) The action of the A.O. in charging a mark-up on reimbursement of expenses incurred by the assessee on management services after incorporation is upheld. Though the Ld.Counsel for the assessee raised arguments on percentage of mark-up, in view of the percentage of mark-up adopted by the assessee in the subsequent years, we do not see any reason to interfere with the rate of mark-up adopted by the Ld.Transfer Pricing Officer. - Decided partly in favour of assessee Expenses incurred on upgradation of accounting software - Held that:- CIT(A) has allowed this expenditure as revenue in nature. While doing so he observed that the assessee itself has characterised certain software purchase on its own as capital assets. He observed that certain software needs regular upgradation or change as per the requirement of fast changing broadcasting industry and that his predecessor has allowed similar expenditure on upgradation of software as revenue in nature. We find no infirmity in this finding of the Ld.CIT(A). - Decided against revenue
|