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The Deputy Commissioner of Income Tax, Company Circle VI (4) , Chennai Versus M/s Technical Stampings Automotive Ltd. (now known as Sungwoo Gestamp Hitech Ltd.) and M/s Sungwoo Gestamp Hitech (Chennai) Limited Versus The Assistant Commissioner of Income Tax, Company Circle VI (4) , Chennai

2016 (7) TMI 732 - ITAT CHENNAI

Transfer pricing adjustment - whether the international transaction made by the assessee was at arm’s length? - Held that:- AO as well as the DRP found that the assessee has not received any service from the parent company. In fact, the Chief Financial Officer of the parent company was summoned under Section 131 of the Income-tax Act, 1961 (in short 'the Act'). He admitted before the Assessing Officer that it is not possible to provide the details of the administrative services provided to the I .....

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at services were rendered by the joint venture company, this Tribunal is of the considered opinion that the DRP has rightly confirmed the order of the Transfer Pricing Officer. - Disallowance of payment of royalty - revenue v/s capital nature - Held that:- The DRP found that the payment was made by the assessee for right to use the technology and technical information for a prescribed period and it is not perpetual. The DRP has also found that the assessee does not obtain any enduring benef .....

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in nature. Therefore, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed. - ITA Nos.1692 & 1693/Mds/2014, ITA No.954/Mds/2014 - Dated:- 9-6-2016 - SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER For The Revenue : Smt. Vijayalakshmi, CIT Sh. Duraipandian, JCIT For The Assessee : Sh. G. Ravi Kumar, Advocate ORDER PER N.R.S. GANESAN, JUDICIAL MEMBER: The Revenue has filed appeals for asse .....

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Hyundai Motors India Ltd. The assessee has paid 4% as service charges for the service rendered by the parent company. The parent company offered services in management and administration, right from the high level strategic planning, including the products to be ventured, type of customers to be targeted, etc. and also day-to-day operation of the assessee-company. The payment made by the assessee-company was disallowed by the Assessing Officer on the ground that there was no evidence to suggest .....

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3. Referring to the copy of service agreement, more particularly Article 2, the Ld.counsel for the assessee submitted that the parent company has provided all the services referred in Article 2 of the agreement. On a query from the Bench, how the parent company was able to provide services in carrying out day-to-day activities of a company which is India? The Ld.counsel could not clarify how the parent company was able to carry on the business of the Indian company. Referring to legal and taxat .....

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ing to the order of the Dispute Resolution Panel, the Ld. D.R. clarified that no evidence was filed before the Transfer Pricing Officer as well as DRP with regard to the services said to be rendered by the parent company. Referring to the directions of the DRP, the Ld. D.R. submitted that it appears that the parent company has done liaison work with Chinese authorities. If this is true, then the Indian company is not expected to make any payment for the liaison work done by the parent company wi .....

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. The assessee claims that it paid administrative charges to the parent company for the so-called services rendered as per the agreement dated 04.02.2009. The parent company appears to have entered into an agreement for providing services described in Article 2 of the agreement. The Assessing Officer as well as the DRP found that the assessee has not received any service from the parent company. In fact, the Chief Financial Officer of the parent company was summoned under Section 131 of the Inco .....

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said to be made by the joint venture partners to the sales of the existing business of the assessee-company was not available on record. In the absence of any material to indicate that services were rendered by the joint venture company, this Tribunal is of the considered opinion that the DRP has rightly confirmed the order of the Transfer Pricing Officer. Therefore, this Tribunal do not find any reason to interfere with the order of the lower authority and accordingly the same is confirmed. 6. .....

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the so-called payment of royalty is a capital expenditure since there was enduring benefit acquired by the assessee. However, the CIT(Appeals) allowed the claim of the assessee on the ground that the payment of royalty is revenue in nature. Referring to the order of the Assessing Officer, the Ld. D.R. submitted that by placing reliance on the observation made by the Dispute Resolution Panel in the assessee's own case for assessment year 2009-10, the CIT(Appeals) allowed the claim without ex .....

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he Ld. counsel, M/s Sungwoo Hitech Company Limited, Korea is the legitimate owner of technical knowhow and the assessee was given the right to use the technical knowhow. According to the Ld. counsel, the assessee has not acquired the intellectual property. The Ld.counsel further clarified that the right to use the technology and the information was for a prescribed period and it is not for perpetual. The Ld.counsel further submitted that the right to use technology for manufacturing a product do .....

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