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2015 (5) TMI 920 - ITAT DELHI

2015 (5) TMI 920 - ITAT DELHI - TMI - Transfer pricing adjustment - international transaction of Royalty payment - Held that:- The most of the key parts are registered in India, contribution of UK entity was considered to be minor as major part of designing of this “India specific product”, it was concluded had been done in India. In view of these facts the TPO questioned the occasion to make royalty payments to JC Bamford. Thus relying on the reasons considered by the DRP in 2007-08 assessment .....

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ted 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. - 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 Di .....

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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 TPO ) with identical direction. Attention was invited to the submissions advanced before the Co-ordinate Bench on 13.03.2015 in the stay No.-155/Del/2015 wherein considering these fac .....

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nor objected to the prayer of the Ld. AR. In order to afford time to the Revenue, the ld. AR was required to file small synopsis for the benefit of the Revenue as the copy of the interim order dated 13.03.2015 was also not available with the Ld. Standing Counsel. The appeal was accordingly adjourned to 17.03.2015 so as to have the departmental response on the pleadings of the Ld. AR. 2. On the next date of hearing, the Ld. AR again relied upon the synopsis filed and made a similar prayer. Filing .....

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he said argument it was submitted if accepted following the judicial precedent then it would address Ground Nos.-1,2,3 raised in the present appeal wherein reference to these specific orders has been made in Ground No.-3 which is reproduced hereunder for ready-reference:- 3. The ld. DRP and the ld. AO (following the directions of the Ld. DRP), erred on facts and in law not appreciating that the issue under consideration is identical to the earlier years (AY 2006- 07 to AY 2008-09) and AY 2009-10 .....

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he 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 .....

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ion w.e.f 1-4.2009 JCB Pune Merged with JCB India under the Hon ble High Court s Approved scheme. The amalgamation scheme was duly approved by Hon ble Mumbai High Court and Hon ble Delhi High Court on 5-2-2010 and 26-5-2010 respectively. It is seen that the TPO addressing the background of the JCB Group took note of the fact that it was promoted by Mr. Joseph Cyril Bamford for manufacturing construction and agriculture equipments in 1945. The JCB Group headquartered in United Kingdom and the ult .....

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nd Singapore. The Group is found to having employed more than 6,000 people and manufactured 220 different machines in 13 product ranges having 550 dealers with 1000 locations covered worldwide. JCB Group s Service, parts and Attachments division as per the TPO s record catered to the demands of customers from 5 continents. Addressing the capability of the Group, the TPO is found to have accepted the claim of the assessee that 99% of the parts were dispatched within 24 hours. Parts centres are lo .....

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coming to the above conclusion first issued cause notice issued to the assessee on the following reasoning:- The payment of royalty of ₹ 1,37,46,72,552 during the year was examined in detail and it is observed that no specific reason regarding the payment of royalty has been furnished 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% .....

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ame 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 key parts were d .....

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acts of the present case adopted the same reasoning leading to rejection of assessee s claim. 3.4. Pursuant to this adjustment of ₹ 137,46,72,552/-proposed by the TPO which subsequently was rectified u/s 154 r.w.s. 92CA(3) ultimately resulting in the addition of ₹ 1,23,11,07,201/- made by way of adjustment in terms of the direction of the DRP. 3.5. In the said factual background considering the consolidated order dated 18.09.2013 passed by the Co-ordinate Bench pertaining to 2006-07 .....

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ent years wherein the TPO consistently held that there was no new technology. The SAID issue when it came before the ITAT the Co-ordinate Bench vide its order dated 18.09.2012 restored the same view of the discussion held in para 10-13 of the said order to the TPO with the following observations:- 14. In view of the above discussions, as agreed between the parties, we set aside the issue of determining the arms length price to the file of the Assessing Officer for fresh adjudication in accordanc .....

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ve 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 earlie .....

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dings:- 4. That on the facts and circumstances of the case and in law, the Ld. AO/Ld/ DRP has erred in rejecting the benefit of adjustment of brought forward losses and unabsorbed depreciation to the extent of ₹ 34,53,80,569/- being difference of assessed losses and returned losses [i.e. ₹ 17,55,44,06,035- 1,41,00,65,466] without appreciating that the said difference is on account of additions which are pending adjudication in Appeal before the Hon ble Income Tax Appellate Tribunal. .....

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in not allowing the complete credit of taxes deducted at source without assigning any reason. 7. The ld. AO erred on facts and in law in charging interest under Section 234A, Section 234b, Section 234C and Section 234D of the Act. 8. The Ld. AO erred on facts and in law in initiating penalty proceedings under Section 271(1)(c) of the Act. That the above grounds of appeal are without prejudice to each other. 5. Qua Ground No.-4 the limited prayer of the Ld. AR was that the AO may be directed to .....

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furnish copies of ITRs of the merged company and also give justification for the claim of losses. The assessee vide letter dated 25.02.2004 as per record is found to have given the following reply:- It is respectfully submitted that M/s JCB Manufacturing Ltd. has merged into JCB India Ltd. with effect from April 1, 2009 in pursuance to the scheme of amalgamation, as approved by the Hon ble Delhi High Courts of Bombay and Delhi vide their orders dated February 5th, 2010 and May 26th, 2010 respect .....

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