TMI Blog2015 (5) TMI 920X X X X Extracts X X X X X X X X Extracts X X X X ..... spute. In the afore-mentioned facts and circumstances, the limited prayer of the assessee is allowed. - I.T.A .No. 1180/Del/2015 & SA-155/Del/2015 - - - Dated:- 8-5-2015 - Smt Diva Singh And Sh. N. K. Saini,JJ. For the Appellant : Sh.G.C.Srivastava, Adv. Sh. Saurabh Srivastava, FCA For the Respondent : Sh.Judy James, Jr. Standing Counsel ORDER Per Diva Singh, JM By the present appeal the assessee assails the correctness of the final order passed by the AO dated 29.01.2015 u/s 143(3)r.w.s 144C(1) of the Income Tax Act, 1961 on various grounds. However the limited prayer of the assessee in the peculiar facts and circumstances of the case was that the issue under consideration in the present year has been a subject matter of adjudication by the ITAT in 2006-07 to 2008-09 assessment years and the view has been followed by the Co-ordinate Bench in 2009-10 Assessment Year also. Referring to the consolidated order of the ITAT whose copy is available at Paper Book pages 49-68 on record, it was his limited prayer that the issue in the year under consideration also may need to be sent back to the file of the Transfer Pricing Officer (hereinafter referred to as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ferred the matter back to Ld. TPO for determination of arm s length royalty rate using the methods prescribed under section 92C of the Act. (emphasis provided) 2.1. Considering the limited prayer of the assessee, the ld. Standing Counsel had no objection if following the judicial precedent the issue is restored. 3. We have heard the rival submissions and perused the material available on record. A perusal of the record shows that pursuant to the assessee s return of income being filed, the AO referred the issue to the TPO in regard to the international transaction with the Associated Enterprises (hereinafter referred to AE ). Since in the facts of the present case, we are only considered with the international transaction of only Royalty payment, we would be adverting only to those facts. 3.1. In order to address the background, we first refer to the facts taken into consideration by the TPO in his order dated 23.01.2014. A perusal of the same shows that JCB India is a wholly owned subsidiary of J.C.Bamford Excavators Ltd., UK and is primarily a manufacturer of Earthmoving and Construction Equipment. The assessee is found to have commenced operations in 1979 and is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shed in the TP Documentation report. IT is also observed that Royalty constitutes about 50% of the manufacturing expenses. Further, it was found that there were two different rates for payment of royalty, i.e.50% for domestic sales, 8% for exports sales on JS75, JS 210 and 3DX version. 3.3. The reply of the assessee, it is seen in response thereto was not accepted by the AO as the TPO followed the view taken in 2007-08 assessment year. Considering the fact that the DRP-I (vide their order dated 26.09.2011 in 2007-08 assessment year) had considered the reliance placed by the assessee on the report of Prof. J.P. Subramanyam the then head Mechanical Engineering Department, IIT Delhi and on considering the same had come to the conclusion that the report was flawed and defective as it did not specify the increase in the performance of the machinery by any quantitative factor qua the claim of the assessee that the model 3DX was a major technological change over the earlier model 3D. Following the conclusion that there was no actual performance related evaluation and also considering the fact that there on facts were there were no patents in UK either and infact design registration of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11.03.2014 restored the same issue to the file to the AO in similar facts and circumstances with the following observations:- 5. We have heard the rival contentions and perused the material available on record. The same issue in earlier 3 years has been set aside by the ITAT and no consequential orders have been passed thereon by AO. It appears that though the ITAT order was produced before DRP but it could not obtain a proper remand or comment from AO. In these circumstances, interest of justice will be served if the similar T.P. issue is also restored back to the file of assessing officer with similar directions as in earlier years. 3.8. In view of the above judicial precedent cited in assessee s own case where admittedly the similarity of facts and circumstances stands established the view taken in the leading order when the issue first arose will need to be followed. Accordingly respectfully following the view taken the issue in the year under consideration is also restored to the file of the TPO with identical direction 4. It is seen that the assessee has also agitated the following grounds in the present proceedings:- 4. That on the facts and circumstances of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mbay and Delhi vide their orders dated February 5th, 2010 and May 26th, 2010 respectively. The copy of the orders have already been filed by our submission dated 23rd October, 2013. As required copy of Income tax return of erstwhile JCB manufacturing Ltd. for the A.Y. 2009-10 is enclosed as Exhibit 2 for your goodself ready reference. It may be observed from the said Income Tax Return, the total brought forward losses of JCB Manufacturing Ltd. have been claimed in the return of income of JCB India for the captioned assessment year in accordance with the provision of the Act. 6.1. In the said background the prayer of the Ld. AR it is seen is based on the fact that the appellant company claimed loss of JCB Manufacturing Limited ( amalgamating company ) as returned to be set off and carry forward. The AO made TP adjustment and reduced the loss in the assessment order. The appeals against TP adjustments are stated to be pending before the ITAT in the case of JCB Manufacturing Limited. The fact that only assessed loss is to be carried forward is not in dispute. In the afore-mentioned facts and circumstances, the limited prayer of the assessee is allowed. 7. Qua Ground No-5 it ..... X X X X Extracts X X X X X X X X Extracts X X X X
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