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TMI Blog2010 (11) TMI 625X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee's submission is 49%) with balance 50% (as per assessee's submission 51%) being held by IOCL in Lubrizol India Pvt. Ltd. (for short "LIPL"), a joint venture between the assessee and IOCL. LIPL manufactures various products in India under license and technology transfer agreement dated 1st April 2000. The assessee is being paid a consideration for providing technical services and for the rights in manufacturing technology, formulation technology and patents rights. Total technical fees of Rs. 14,48,32,150 has been paid during the year and the same has been offered as royalty in the return of income filed on 8th December 2006. The case was referred for transfer pricing analysis, however, as per the order dated 27th October 2009, passed under section 92CA(3), no adjustments to Arms Length Price of the transaction, as reported by the assessee, were made. The Assessing Officer noticed that Indian subsidiary namely LIPL is engaged not only in manufacturing of products development by Lubrizol Corporation, U.S.A. (assessee) but also marketing of products manufactured by the assessee. He noted that the sale in India made by the assessee are as below:- Sales to LIL USD 78,1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngth payment by agent ought to extinguish further liability of the principal even if P.E. is alleged. Further, there is incorrect levy of interest under section 234B. The assessee's submission is that the issue is squarely covered by the decision of the Hon'ble Supreme Court in the case of Director of Income Tax Taxation) v/s Morgan Stanley and Co. INC., (2007) 292 ITR 416 (SC), wherein it has been held that once the transfer pricing analysis is undertaken, there is no further need to attribute profits to P.E. which is an associated enterprise, and has been remunerated on an arm's length basis taking into account all the risk taking functions of the multinational enterprise. Further, it is submitted that LIPL is an independent service provider to the assessee. The assessee pointed out that since the conditions laid down in Article 5(4) r/w Article 5(5) do not get fulfilled, the petitioner cannot be considered as having an agency P.E. in India. In this regard, the assessee placed reliance on the decision of Jurisdictional Tribunal in Dy. Director of Income Tax (International Taxation)-I(2) v/s Daimler Chrysler A.G., (2010) 39 SOT 418 (Mum.), wherein it has been held that since the I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid guidelines, it has been laid down that the bench is not to insist on the rejection letter either from the Assessing Officer or from the CIT(A). He further referred to the decision of the Tribunal in the case of M/s. KEC International Limited V/s ACIT, Stay Petition No.13/Mum./2010, vide order dated 12th February 2010, wherein the Tribunal has taken note of the observations made by a co-ordinate bench of the Tribunal in the case of B.N. Nobis and Co. v/s JCIT, 71 TTJ 153, which reads as follows:- "5. Before parting with the matter, we may make some observations on Revenue's objection, relying on Hon'ble Supreme Court's observations in Dunlop's case (supra), to the stay petition on the ground that paucity of funds has not been sufficiently demonstrated and that for this reason alone stay should not be granted. Hon'ble Supreme Court has indeed decried 'the practice of granting interim orders merely because assessee is able to show a good prima facie case', but to appreciate true import of Hon'ble Supreme Court's censure, one has to understand the context in which Their Lordships expressed such feelings. Their Lordships started with the observation that......" It is indeed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s provided in the statute itself. Therefore, observations of Hon'ble Supreme Court in the context of grant of stay in writ proceedings do not have the binding force on, or even direct relevance to, the principles governing grant of stay during these appellate proceedings. In this context, we are reminded of the observations of Hon'ble Supreme Court, in Mumbai Kamgar Sabha vs. Abdulbhai Faizullbhai AIR 1976 SC 1455, that......... "It is trite, going by Anglophonic principles, that a ruling of superior Court is binding in law. It is not of spiritual sanctity but is of ratio-wise luminosity within the edifice of facts where the judicial lamps plays the legal flame. Beyond those walls and de hors the milleu we cannot impart the eternal vernal value to the decision, exalting the doctrine of precedents into prison house of bigotry, regardless of varying circumstances and myriad developments, Realism dictates that a judgment has to be read, subject to the facts directly presented for consideration and not affecting those matters which may lurk in the dark". 6. We are, therefore, of the view Hon'ble Supreme Court's obiter dicta should not be perceived as a blind man's walki ..... X X X X Extracts X X X X X X X X Extracts X X X X
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