Subscription   Feedback   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Forum Articles Highlights TMI Notes SMS News What's New Calendar Imp. Links Database More...
Extracts
Home List
← Previous Next →

Deputy Commissioner of Income Tax Circle 27 (2) New Delhi Versus YKK India Pvt Ltd and YKK India Pvt Ltd Versus Assistant Commissioner of Income Tax Circle 18 (1) , New Delhi

Transfer pricing adjustment - Held that:- When an Assessing Officer holds that no services are rendered by the AE, essentially he holds that the payments made in the international transaction in question are not arm’s length payments. The ascertainment of ALP by the TPO is not a theoretical exercise inasmuch as the ALP determination is for the actual transaction and not a hypothetical transaction envisaged by the contractual arrangement. It cannot, therefore, be open for the Assessing Officer to .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d result in overlapping jurisdictions. As our day to day experience shows, the TPOs not only examine what is stated in the contract but also what has happened on the ground. In view of these discussions, and for the short reason that the payments for international transactions in question, i.e. payment of technical services fee to the AEs, have been held to be at ALP by the Transfer Pricing Officer, the impugned disallowances were wholly unsustainable in law. In any case, we have perused the nat .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

(A) in the matter of assessment under section 143(3) of the Income Tax Act, 1961, for the assessment year 2003-04. 2. It was, at the outset, pointed out that the appeal filed by the Assessing Officer is a belated appeal inasmuch as while the impugned order was served upon the Assessing Officer on 7th March 2008, the present appeal is filed by the Assessing Officer on 18th January 2016, after obtaining approval of the Commissioner on 16th January 2016. The delay is of thus 7 years and 238 days. L .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

i IX, New Delhi, has prayed for condonation of delay. It has been submitted that it was only on 12th January 2016 that the CIT(DR) informed the petitioner that while the revenue has not contested the issue regarding disallowance of technical fees for the assessment year 2003-04, the same issue is being contested for the assessment year 2004-05. The petitioner was informed that not contesting the same disallowance in an earlier year may prejudice the case of the petitioner for the subsequent year .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he decision given by the CIT(A) . The petitioner further submits that it is possible that there was some mishap and only one set of appeal papers were filed . It is in this backdrop that the petitioner prays as follows: Under these circumstances, we beg the leave of the Hon ble Court to allow us to refile the appeal for the AY 2003-04 on the ground being contested in the AY 2003-04 in respect of identical ground being contested for AY 2004-05. It may be mentioned that this particular issue is a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

according to the learned counsel, the petitioner has nothing to say except reliance on certain inferences drawn. He contends that the fact that the interests of the revenue will be prejudiced for the subsequent year cannot have any bearing on the condonation of delay by the appellant. There is nothing more than the impact on revenue s appeals for the subsequent years which is stated to be reason for which the delay should be condoned, but that, according to the learned counsel, is wholly irrelev .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f not filing the appeal. If such a belated dawn of wisdom can be reason for admission of appeal even belatedly, the law of limitation will cease to have any relevance. We are urged to reject the condonation petition and dismiss the appeal in limine. 5. Having perused the petition and having heard the rival contentions on the same, we are not inclined to yield to the prayer of the petitioner. There is nothing on record to show, or even indicate, that a decision was taken to file the appeal but it .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s a sufficient cause for delay in filing of appeal, but then in the present case, there is nothing to demonstrate the cause of delay; if at all, the facts set out in the petition show anything, these facts show the cause of filing the appeal now, rather than the cause of delay in filing of the appeal. There is a difference in cause of delay and inferences about cause of delay. Unless the cause of delay is known, which is quite different from inference about the cause of delay, it is not even pos .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ht years. That cannot, by any stretch of logic, be the cause of delay; that can at best be the impact and consequences of delay, but then, at the cost of repetition, consequences of delay, howsoever material, cannot be reason enough to condone the delay itself. In view of these discussions, in our considered view, the condonation petition does not deserve to be accepted. We reject the same. The appeal is dismissed as time barred. Having held so, we may also add that even on merits grievance of t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

37(1) of the Act . Such a grievance is wholly ill conceived inasmuch as there is no bar on deductions in respect of payments made to even wholly owned subsidiary companies or, for that purpose, in recognition in incomes from the wholly owned subsidiaries. The grievance raised by the Assessing Officer cannot even be taken seriously, leave alone being accepted. On merits also, therefore, the Assessing Officer has no case. 6. The appeal filed by the Assessing Officer is, therefore, dismissed. 7. C .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t the learned CIT(A) has erred in upholding the disallowance of technical fees of ₹ 60,89,599 paid to a related party, i.e. YKK Holding Asia Pte Ltd, without considering the order passed under section 92CA(3) of the Income Tax Act for AY 2003-04 wherein entire amount of technical fees has been considered and allowed. 8. So far as this grievance of the assesse is concerned, a few material facts and the development leading to this appeal will have to be taken note of. The assessee before us .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

vices are paid . The Assessing Officer did not stop at that. He went on to observe that the most important question is whether the collaboration agreement between the assessee company (licensee) and the licensor YKK Corporation Japan warrants such payment of technical fees or such payment is covered under the royalty agreement . In plain words, the case of the Assessing Officer was that since the assessee had paid royalty to YKK Corporation Japan, there was no need to make separate payments towa .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

see were in the nature of assistance in marketing and procurement, support in research and development activities of the assessee, informational technology support services (such as infrastructure support, implementation of WAVE System for production planning and control, implementation of WAVE system, helpdesk and technical support for AS400, NT Server, Lotus notes etc etc) and assistance and support in administrative, secretarial, accounting and finance function. The Assessing Officer was of t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ed by the assessee company as technical fees and for which huge amount of ₹ 92,72,214 is being paid to YKK Holding Asia Pte Ltd are very much forming part of the licence agreement , that it was legal duty of the licensor to provide such services for which he was already paid as royalty charges , and that, therefore, technical fees at ₹ 92,72,214 to its own associate enterprises is nothing but a diversion of income and hence is required to be disallowed . Aggrieved, assessee carried t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ort, training schedule, quality management system and environmental management system, various charts, photographs and factory layouts but these documents do not support actual rendition of services by YHA . As regards the payment of ₹ 14,93,297 for sales support to the fasteners division , the CIT(A) noted that the TP report categorically states that YKK India s marketing strategy is essentially driven through relationship marketing whereby company s marketing personnel maintain regular c .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

, the CIT(A) did acknowledge that the reports under the head internal quality audit and management review, various charts on different aspects were placed by the assessee but he was of the view that these things donot evidence rendition of services, and that in any event, as the TP study states YKK India s marketing strategy is essentially driven through relationship marketing whereby company s marketing personnel maintain regular contact and goodwill with its dealers and direct customers and th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

extent of ₹ 60,89,599. The assessee is aggrieved and is in appeal before us. 9. Having heard the rival contentions and having perused the material on record, we see merits in the grievance of the assessee. The payments made by the assessee to its AE were covered by the international transactions reported by the assesse and the TPO have accepted the same to be arm s length payments. Under these circumstances, it cannot be open to the Assessing Officer to usurp the powers of the Transfer Pri .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ce, to the TPO. It is also elementary that what the Assessing Officer cannot do directly, he cannot do indirectly either. What has been termed as a disallowance under section 37(1), given the facts of the case in which a reference was made to the TPO which has held that the payments to AE for technical services fees are at arm s length price, are de facto ALP adjustments mace directly by the Assessing Officer. However, once a reference is made by the Assessing Officer under section 92CA(3), the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

  ↓     Latest Happening     ↓  

Forum: Input tax credit

Forum: Cess paid instead of SGST

Forum: Excise duty credit on finished stock at additional place of business.

Circular: Amendments in Hand Book of Procedures 2015-20 –reg.

News: Cabinet approves Extension of time period of the Scheme "Special Industry Initiative for J&K" (Sll J&K) - Udaan

Highlight: Constitution of National Anti-profiteering Authority (NAA) under GST-reg. - Trade Notice

Highlight: Amendments in Hand Book of Procedures 2015-20 –reg. - Various amendments are made in Chapter-4 of Hand Book of Procedures 2015-2020.

Forum: GST rates on mobile recharge business

Circular: Constitution of National Anti-profiteering Authority (NAA) under GST-reg.

Forum: import purchase

Highlight: Sharing of expenses - BAS - promotion of business of group companies - sharing of expenditure for common facilities cannot be treated as service by one to another in such arrangement.

News: RBI Reference Rate for US $

Forum: 3B mistake

Article: Credit of unsold stock [Section 140(3)] - Actual Credit as well as Notional Credit - Part-I - GST Transitional provisions

Circular: Certain Clarifications sought on Construction Services provided in the Real Estate Sector – reg.

News: Anti-dumping duty on import of bus/truck tyres from China

News: Fast-track GST refund, else ₹ 65K cr may be stuck: Exporters

Highlight: It is open to the Settlement Commission to use best judgment in arrival of the figure. Nonetheless it has to explain the manner in which the best judgment figure has been arrived at by the Settlement Commission - HC

Highlight: Deemed dividend u/s 2(22)(e) - advances given to societies - in the absence of legal right of the assessee in the said society the amount advanced cannot be treated as deemed income.

Highlight: When electrical installations are treated as plant and machinery the depreciation has to be allowed @ 25% as per provisions contained u/s 32

TMI Note: Capital Gain - transfer of right in the land or transfer of land itself - addition u/s 50C - Harassment to the honest tax payers

Highlight: Option to avail composition scheme under GST by electronically filing an intimation in FORM GST CMP-02 and FORM GST ITC-03 upto 30-9-2017 - See Rule 3(3A)

TMI Note: Does ICDS apply for the purposes of computing exemption u/s 11 to 13.

Highlight: Voluntary Reporting of Estimated Current Income and Advance Tax Liability - CBDT issues draft notification

TMI Note: Certain ICDS provisions are inconsistent with judicial precedents. Whether these judicial precedents would prevail over ICDS.

Highlight: Provisions of ICDS shall prevail w.e.f. AY 2017-18 to the transactional issues dealt therein over earlier judicial pronouncements.

Notification: Levy of anti dumping duty on New/unused pneumatic radial tyres with or without tubes and/or flap of rubber (including tubeless tyres) having normal rim dia code above 16 originating in, or exported from China PR

News: Voluntary Reporting of Estimated Current Income and Advance Tax Liability

TMI Note: In case of conflict between ICDS and other specific provisions of the Income-tax rules, 1962 governing taxation of income like rules 9A, 9B etc. of the Rules, which provisions shall prevail.

TMI Note: Does ICDS apply to computation of Minimum Alternate Tax (MAT) u/s 115JB of the Act or Alternate Minimum Tax (AMT) u/s 115JC of the Act.

TMI Note: Where a term has not been defined under ICDS, nor under the Act, but has different interpretations given to it by the courts in tax cases, and in ICAI Accounting Standards, which interpretation would prevail while interpreting ICDS.

TMI Note: Whether the provisions of ICDS apply to a non-resident who claims the benefit of a double taxation avoidance agreement (DTAA).

TMI Note: In case any of the ICDS provisions is contrary to a circular or press release issued by the CBDT, which would prevail over the other.

TMI Note: ICDS-I requires disclosure of significant accounting policies and other ICDS requires specific disclosures. Where is the taxpayer required to make such disclosures specified in ICDS.

Notification: Income Computation and Disclosure Standards (ICDS) - New ICDS to be effective from AY 2017-18

News: RBI Reference Rate for US $

Highlight: GST - Detention of goods under transport - discrepancy in documents - the statutory provisions provide a mechanism for adjudication following detention of goods including for the provisional release thereof pending adjudication - HC

Highlight: Reassessment - first few paragraphs of the assessment order dealt with objections and disposed of accordingly - Unfortunately, the manner in which the AO has decided the issue is wholly unsustainable in law - HC

Highlight: Business expenditure u/s 37 - liquidated damage - breach of contract terms - Expenditure was not incurred for any purpose which is an offence or which is prohibited by law - cannot be disallowed - HC

Highlight: Valuation - inclusion of reimbursement of expenses - managing participation of clients in certain mela, fairs, promotional activities etc. - They are liable to service tax on the gross amount received - They cannot restrict their tax liability to only agency commission

Highlight: TDS liability - ITAT confirmed the liability - We do not see how it is possible for us to uphold the order of the Tribunal and when it purports to decide two Appeals of the Revenue by single paragraph conclusion - HC

Highlight: Reopening of assessment - sufficiency of material available with the AO to form a belief that income chargeable to tax had escaped assessment - bogus purchases - seller refused to respond - notice would not be interfered with - HC

Highlight: Exemption u/s 11 - education activities - transport and hostel facilities surplus cannot be considered as business income of the assessee society

News: Draft Notification for insertion of new rule 39A in the Income-tax Rules, 1962 – comments and suggestions-reg.

Highlight: Genuineness of labour wages expenses, embroidery charges, fabrication expenses etc. - getting work done through small workmen who do not have any permanent place of residence - disallowance of ad hoc expenditure deleted.

Highlight: Project import - Since the goods were never used for the purpose for which it was imported, the actual user condition has been violated - Redemption fine and penalty imposed.

Highlight: Penalty u/s 112 (a) - CHA - Lack of due diligence and failure to take more precautions can not, by itself, bring in penal consequences

Highlight: Import of services - GST - The fact that those services were received outside India will not change the fact that the services have been paid for by the beneficiary appellant, who is located in India. - Demand confirmed.

Notification: SEZ for IT/ITES at Madhurwada Village, Visakhapatnam District in the State of Andhra Pradesh - denotified.

Highlight: Merely because payment is received in Indian rupee, it cannot be said that payment against export has not been received in convertible foreign exchange.



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version