TMI Blog2012 (10) TMI 127X X X X Extracts X X X X X X X X Extracts X X X X ..... ew the ratio of Hon’ble Bombay High Court in assessee’s own case for the AY 2002-03 - in favour of assessee. Repairs and maintenance expenses - Held that:- It is not clear from the documents filed by the assessee as to whether the expenditure in question incurred by the assessee on repairs and maintenance is of revenue nature inasmuch as it is very difficult to come to a conclusion that the expenses incurred by the assessee on repairs and maintenance were on purchase of spare parts of plant and machinery and miscellaneous work done to the building and there was no new capital asset acquired by the assessee as a result of incurring of the said expenses. Thus the expenses in question incurred by the assessee were rightly treated by the AO as capital expenditure - against assessee. TP adjustments - CIT (A) deleted the addition made by AO - Held that:- As decided in assessee's own case in AY 2006-07 that when assessee is dealing with an AE, at least there are no commercial risks, no marketing costs and there could be several other factors as well justifying a normal discount as the assessee could indeed go to many important customers. It hardly needs to be emphasized that even in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 21,10,564/- to the value of closing stock declared by the assessee. The Ld. CIT (A) confirmed the said addition made by the AO on this issue following the decision of his predecessor in assessee s own case for the earlier year and directed the AO to verify the claim of the assessee regarding the exact quantum of addition. 4. We have heard the arguments of both the sides and also perused the relevant material on record. It is observed that a similar issue had come up for consideration before the co-ordinate Bench of this Tribunal in assessee s own case for AY 2001-02 and vide its order dated 7th February, 2008 passed in ITA 6854/M/2002, the same was restored by the Tribunal to the file of the AO with a direction to decide the same afresh after verifying the recast accounts to be prepared and furnished by the assessee in terms of sec.145A of the Act after including tax, duty, cess or fees as provided in the said section. Respectfully following the said order of the Tribunal, we set aside the impugned order of the Ld. CIT (A) on this issue and restore the matter to the file of the AO for deciding the same afresh as per the same direction as given by the co-ordinate Bench fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... treated as partly allowed for the statistical purpose. 6. The issue raised in ground no.2.7 2.8 of the assessee s appeal relates to its claim for deduction u/s.80HHC in respect of foreign exchange gain. 7. We have heard the arguments of both the sides also perused the relevant material on record. As submitted by the Ld. Counsel for the assessee, the impugned foreign exchange earned in the year under consideration was in respect of export proceeds realized and even the Ld. CIT (A) on page no.6 of his impugned order has given a finding that the foreign exchange gain is related to the export business of the assessee. In assessee s own case for AY 2002-03, the Hon ble Bombay High Court has held that what is liable to be excluded from the profits of business for the purpose of computing the deduction u/s.80HHC is the income which is unrelated to the export activity of the assessee. Since the foreign exchange gain earned by the assessee for the year under consideration in respect of realization of export proceeds is directly relatable to its export activity, we are of the view that the same cannot be excluded from the profits of business for the purpose of computing the deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. After perusing the copies of bills filed in the paper book of the assessee as well as written submissions filed by the assessee before the Ld. CIT (A), we find that the same are not sufficient to support and substantiate the case of the assessee that the impugned repairs and maintenance expenses are of revenue in nature. It is not clear from the documents filed by the assessee as to whether the expenditure in question incurred by the assessee on repairs and maintenance is of revenue nature inasmuch as it is very difficult to come to a conclusion on the basis of the said documents that the expenses incurred by the assessee on repairs and maintenance were on purchase of spare parts of plant and machinery and miscellaneous work done to the building and there was no new capital asset acquired by the assessee as a result of incurring of the said expenses. In our opinion, the onus in this regard is on the assessee to establish on evidence that the expenses in question were incurred on current repairs and since the assessee has failed to discharge the said onus satisfactorily, we are of the view that the expenses in question incurred by the assessee were rightly treated by the AO as ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d of any merits. We have noted that the assessee has followed the TNMM for determination of ALP and the Assessing Officer has not even disputed TNMM being most appropriate method on the facts of this case. The question of applying CUP, even if that be so, can only arise when TNMM is rejected. Even under CUP method, it is not necessary that all sales must take at the same price. There can always be variations of prices for the same product or services on valid grounds, such as quantum of business, risk factors, marketing efforts needed etc. When assessee is dealing with an AE, at least there are no commercial risks, no marketing costs and there could be several other factors as well justifying a normal discount as the assessee could indeed go to many important customers. It hardly needs to be emphasized that even in independent business situations granting discount is a normal occurrence, and unless the Assessing Officer demonstrates that the discount so allowed would not have been allowed in an arm s length situation, ALP adjustment cannot be made in respect of the same. We are alive to the fact that the discount is allowed by the virtue of status as associated enterprise, but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... porting strongly the impugned order of the Ld. CIT (A) wherein relief has been given to the assessee on this issue by holding that the amount in question paid by the assessee to Dresser Rand Company, USA toward development expenses is not chargeable to tax in India in the hands of the said non-resident, the Ld. Counsel for the assessee has submitted that the assessee has deducted the tax at source from development charges paid to Dresser Rand Company, USA in the next financial year and the tax so deducted having been paid before the due date of filing return, the disallowance u/s.40(a)(i) is not sustainable on this ground also as per the amendment made in the relevant provisions which has been held to be retrospective. The Ld. DR has not raised any material contention to controvert this submission made by the Ld. Counsel for the assessee. Keeping in view this submission made by the Ld. Counsel for the assessee as well as specific finding giving by the Ld. CIT (A) about non-taxability of development charges paid by the assessee in the hands of Dresser Rand Company, USA in India which has remained unrebutted by the Ld. DR, we find no justifiable reason to interfere with the impugne ..... X X X X Extracts X X X X X X X X Extracts X X X X
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