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2016 (12) TMI 43 - ITAT DELHI

2016 (12) TMI 43 - ITAT DELHI - TMI - Transfer pricing adjustment - payment on account of royalty by aggregating transaction along with all other international transactions based on CUP - Held that:- Keeping in view the law laid down in CIT vs. EKL Appliances [2012 (4) TMI 346 - DELHI HIGH COURT] and the fact that the contention of the assessee company that the payment on account of royalty by aggregating transaction along with all other international transactions based on CUP has been accepted .....

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g heard to the assessee. - Adjustment in respect of intercorporate services - non furnishing of details of expenses in the shape of service charges and corporate services received from its AEs - Held that:- As relied upon CIT vs. EKL Appliances (supra) and further contended that during the AY 2010-11 and AY 2012-13 in assessee’s own case, the revenue has accepted the contention of the assessee that intra-group services have actually been received by the assessee from its AEs. Even otherwise .....

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y of being heard to the assessee. So, this issue is also restored to the TPO. - ITA No.1592/Del./2014 - Dated:- 22-9-2016 - SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER and SHRI KULDIP SINGH, JUDICIAL MEMBER For The Assessee : Shri Vidur Puri, CA For The Revenue : Shri Munesh Kumar, CIT DR ORDER PER KULDIP SINGH, JUDICIAL MEMBER : Appellant, M/s. Magotteaux Industries Pvt. Ltd. (hereinafter referred to as the assessee ), by filing the present appeal sought to set aside the order passed by the AO/TPO/DR .....

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DRP erred in determining the arm's length price of royalty payments to its A.E. at NIL 2.2 On the facts and in law, the Id. AO, ld. TPO and hon'ble DRP erred in holding that the Assessee could not justify the payment of royalty to its AE. 2.3 On the facts and in law, the ld. AO, ld. TPO and hon'ble DRP erred in treating ₹ 1,20,70,435 as adjustments u/s 92A on account of payment of royalty to its AE when the actual royalty charged to Profit and Loss Account was ₹ 1,12,70,2 .....

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AO, ld. TPO and hon'ble DRP erred in treating ₹ 3,14,87,895 as adjustments u/s 92A on account of intra group services when the assessee has actually charged to Profit and Loss Account ₹ 2,57,91,160 for intra group services received and claimed in returned income for the year, after offering ₹ 48,20,700 as prior period expense. 4. The Hon'ble DRP erred on facts and in law in not considering the supporting documents in respect of royalty and intra-group services filed dur .....

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transaction, which is allowable as per Proviso to section 92C (2) of the Income Tax Act, 1961. 7. On the facts and in law, the ld. AO erred in not allowing MAT credit of ₹ 56,28,145 u/s 115JAA of the Income Tax Act, 1961. 8. On the facts and in law, the ld. AO erred in excess interest charged u/s 234B of the Income Tax Act. 9. On the facts and in law, the ld. AO, ld. AO erred in excess interest of ₹ 3,96,342 charged u/s 234C of the Income Tax Act, 1961 which is chargeable on the ret .....

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7; 4,14,45,462/- which it has revised on the same date declaring same income by explaining that it had not adjusted credit of tax available to the assessee company u/s 115JAA of the Act in the original return due to inadvertent error. During scrutiny proceedings, Shri Afsar Jamil, CA/AR for the assessee put in appearance, furnished requisite details, books of account and bills/vouchers. 3. Pursuant to the reference made to the Transfer Pricing Officer (TPO) u/s 92CA(1) of the Act TPO has passed .....

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declared by the assessee company + ₹ 4,42,08,235/- addition on account of transfer pricing adjustment). 4. Feeling aggrieved, the assessee has come up before the Tribunal by challenging the impugned order passed by AO/TPO/DRP by way of present appeal. 5. We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case. 6. At the ve .....

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g FY 2008-09 as under :- S.No. Nature of transaction Amount (in INR) 1. Purchase of raw materials 6,68,11,684 2. Sale of finished goods 23,16,64,685 3. Payment of Royalty 1,20,70,435 4. Receipt of services 3,14,87,895 5. Provision of support services (amount received) 47,78,331 6. Cost Reimbursement (paid) 2,50,51,980 7. Other receipts 16,99,028 8. Interest on loans 42,26,328 9. It is also not in dispute that assessee company had debited the payment to the tune of ₹ 1,20,70,435/- on accoun .....

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fy the payment of royalty to its AEs adjustment on this account has to be made. Ld. AR for the assessee has also raised a ground that TPO/DRP have erred in treating the amount of ₹ 1,20,70,435/- as adjustments u/s 92A on account of payment of royalty to its AEs when the actual royalty charged to the profit and loss account was ₹ 1,12,70,219/- and claimed in return of income for the year under assessment after offering ₹ 8,00,216/- as prior period expenses. Ld. AR further conten .....

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;s length price - Assessment years 2002-03 and 2003-04 - Whether it is not necessary for assessee to show that any legitimate expenditure incurred by him was incurred out of necessity; and that any expenditure incurred by him for purpose of business carried on by him has actually resulted in profit - Held, yes - Whether quantum of expenditure can, no doubt, be examined by TPO, but in judging allowability thereof as business expenditure, he has no authority to disallow entire expenditure or a par .....

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Accordingly, he disallowed same - Whether when full justification supported by facts and figures had been given by assessee to demonstrate that increase in employees cost, finance charges, administrative expenses, depreciation cost and capacity increase had contributed to continuous losses, TPO was not justified in disallowing brand fee in computation of ALP - Held, yes [In favour of assessee] 12. Keeping in view the law laid down by the Hon ble jurisdictional High Court and the fact that the c .....

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ing FY 2009-10), we are of the considered view that the matter is required to be remanded to the TPO to decide afresh on furnishing the facts by the assessee after providing an opportunity of being heard to the assessee. Consequently, grounds no.2.1, 2.2 & 2.3 are determined in favour of the assessee for statistical purposes. GROUNDS NO.3.1, 3.2, 3.3 & 4 13. Ld. TPO/DRP have made adjustment in respect of intercorporate services to the tune of ₹ 3,14,87,895/- on the ground that the .....

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in relied upon CIT vs. EKL Appliances (supra) and further contended that during the AY 2010-11 and AY 2012-13 in assessee s own case, the revenue has accepted the contention of the assessee that intra-group services have actually been received by the assessee from its AEs. Even otherwise, there is a mistake apparent on record that the TPO/DRP have treated ₹ 3,14,87,895/- as adjustment u/s 92A on account of intra-group services when the assessee has actually charged to profit & loss acc .....

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