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2020 (12) TMI 253 - AT - Income TaxAddition on account of transfer pricing adjustment - international transaction as per the provision of section 92E - assessee company is engaged in the business of trading in natural gas - HELD THAT:- The assessee has stated that all the above international transaction was at arms length price. The BGEH is the associated company of the assessee incorporated in the United Kingdom and it has negotiated with the Cairn Group for purchasing of gas from Laxmi field which was located in India. The average price of natural gas in the international market was at USD dollar 3.9975 per Giga Joule whereas the price paid as per the agreement by the assessee company was at USD 3.9414 per Giga Joule including 1% commission paid to its associate company. It is also demonstrated from the copies of agreement placed in the paper book that associate concern of the assessee company BGEH had no agreement with Cairn for the purchase of gas from Laxmi filed and BGEH has provided only negotiation services. The assessee has purchased the gas from Cairn and from other operators from Laxmi field, ONGC, World Tata Petrodyne Ltd on the same price therefore it cannot be said that assessee has not made transaction according to arms length principles. Ground of appeal of the revenue is dismissed. Addition u/s. 40(a)(ia) r.w. 195 - payment of purchase commission and guarantee commission by the assessee company to British Gas Energy Holding Ltd. a group holding company situated in United Kingdom - CIT-A deleted addition - HELD THAT:- As decided in the case of the assessee itself for assessment year 2007-08 Payment of consideration would be regarded as "fee for technical/included services" only if the twin test of rendering services and making technical knowledge available at the same time is satisfied.' The rendition of services for earning commission cannot be of such a nature that there is a transfer of technology, in the sense it is required to fulfil the 'make available' clause in the Indo UK DTAA. It is also elementary that in a case in which the provisions of the DTAA are applicable, the provisions of the Income Tax Act apply only to the extent the same are beneficial to the assessee. In view of these discussions, quite clearly, even if the commission income in the hands of the recipient is taxable under the provisions of Section 9, the provisions of the Indo UK DTAA will come to the rescue of the assessee. Whichever way one looks at it, whether in the light of the provisions of the Act or the Indo UK DTAA, the conclusions of the CIT(A) do not call for any interference. Disallowance of expenses u/s. 14A - HELD THAT:- This is the year in which the Rule 8D had admittedly come into force and as per assessee's claim that it had sufficient interest free funds. No disallowance is made by the Assessing Officer in respect of interest payments.
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