Tax Management India. Com
                            Law and Practice: A Digital eBook ...
TMI - Tax Management India. Com
Case Laws Acts / Rules Notifications Circulars Tariff/ ITC HSN Forms Manuals SMS News Articles
Highlights
        Home        
 

TMI Blog

Home List
← Previous Next →

2017 (2) TMI 1318

ary to do so, he may refer the computation of the ALP, in relation to the said international transaction, u/s 92CA of the Act, to the TPO, after obtaining approval from the Commissioner or from the Principal Commissioner. - What has to be referred by the Assessing Officer is the computation of ALP in relation to the said international transaction. No letter or correspondence making the reference to the TPO by the Assessing Officer is produced before us. Moreover, the approval was taken from the DIT(IT)-Kolkata, for referring M/s. Dongfang Electric, Kolkata Project Office to the TPO and not any international transactions. The TPO, in this case tried to identify the international transactions that the assessee has entered into and then proceeded to determine the ALP. No international transaction was identified by the Assessing Officer and referred to the TPO after taking approval of the DIT (International Taxation). The assessee’s case is that there is no international transaction on the facts of his case. This aspect should have been adjudicated and approval taken from the appropriate authority. Thus, the mandate of the Section has not been followed by the Assessing Officer. Hen .....

X X X X X X X

Full Text of the Document

X X X X X X X

Sagardighi Power Projects at Murshidabad, West Bengal and the other with The Durgapur Projects Limited (DPL) for setting up units 7(1x300 MW) for the Durgapur Project Power Station at Durgapur, West Bengal, Each contract was divided into two distinctly separate parts, the details of which are as under: DPL : (a) Contract No. Sg TPP/1/SgMP-I Supply)/03/2004 dated August 26, 2004 for supply of equipment and materials of Main Plant Turnkey Package (sgMP-I) Units 1 & 2 (2X300 MW) alongwith some common facilities and (b) Letter of Award (LOA) dated July 27, 2004 issued by WBPDCL for supply of equipment and materials of Main Plant Turnkey Package (SgMP-I) Units 1 & 2 (2X300 MW) alongwith some common facilities: (c) Contract No. SgTPP/1/(SgMP-I ERECTIONS)/04/2004 dated August 26, 2004 for erection and services of Main Plant Turnkey Package (SgMP-1) Units 1&2 (2X300 MW) alongwith some common facilities and (d) Letter of Award (LOA) dated July 27, 2004 issued by WBPDCL of Erection and Services of Main Plant Turnkey Package (SgMP-I) Units 1 & 2 (2X300 MW) alongwith some common facilities: As per the terms of the said contracts, the consideration to be received by the company .....

X X X X X X X

Full Text of the Document

X X X X X X X

any will opt for taxation on net income basis under sub-section (2) of the said section which requires maintenance of regular books of accounts u/s 44AA as well as preparation of accounts and getting the same audited as required u/s 44AB which are subject to scrutiny by the assessing officer u/s 143(3) of the Act. After considering the assessee s submissions separate orders u/s 197 were passed on 28.02.2005, WBPDCL & DPL were directed to deduct tax at source u/s 195 the following manner: * Offshore supply: A sum equivalent to 2.5% of gross receipts under this contract(s) was deemed to be income for the purpose of determination of rate at which tax was required to be deducted at source. Accordingly, rate of TDS was determined at 41.8% (the rate prescribed in the Finance Act plus surcharge & cess as applicable) of 2.5% or @ 1.045%. * Local supply and services: A sum equivalent to 10% of gross receipts under this contract(s) was deemed to be income for the purpose of determination of rate of tax which was required to be deducted at source. Accordingly, rate of TDS was determined of 41.8% (the rate prescribed in the Finance Act plus surcharge & cess as applicable) of 10% or .....

X X X X X X X

Full Text of the Document

X X X X X X X

It is considered necessary to do so, because there may be some profit attributable to offshore supply which can only be determined after regular assessment. 3. The assessee has filed his return of income electronically on 30/09/2011, declaring -Nil- income. The assessee has not offered to tax any income on off-shore supplies on the ground that no income accrues or arises in India. It offered to tax revenue from on-shore supply of services on percentage completion method as laid down in AS-7 of The Institute of Chartered Accountants of India (ICAI), for construction contracts. The Assessing Officer made a reference to the TPO u/s 92CA(1) of the Act, after receiving due approval from the Ld. DIT(IT)- Kolkata. The JCIT (TPO)- Kolkata vide his order u/s 92CA(3) of the Act, dt. 30/01/2017, has determined that assessee company should have earned a profit ₹ 5,92,36,331/-, instead of -Nil- return filed by the assessee. The DRP, partly upheld the order of the TPO. The Assessing Officer passed this final assessment order, in accordance with the directions of the DRP determining the total income of the assessee at ₹ 5,51,46,673/-, interalia considering the amount as the profit of .....

X X X X X X X

Full Text of the Document

X X X X X X X

, the AO/ TPO/ DRP has erred in not even considering guidelines laid down by the Courts including Hon'ble Income Tax Appellate Tribunal in similar situations including that of the Appellant in earlier years. 7. On the facts and in the circumstances of the case and in law, the present impugned conclusions of AO/ TPO/ DRP in the impugned order are result of baseless, inconsistent and self-contradictory presumptions on facts and law. 8. On the facts and in the circumstances of the case and in law, the AO has erred in law and on the facts of the case in making reference under section 92CA of the Act to the TPO on erroneous assumption that: (i) the Project office and the Head Office in China are Associated Enterprise; (ii) domestic activities carried out by the Project Office are international transactions within the meaning of section 928 of the Act; and (iii)the project office is a sub-contractor of the Head Office in China and should be remunerated by the Head Office on an arm's length basis. 9. On the facts and in the circumstances of the case, the AO/ TPO/ DRP vide impugned order have erred in law and on the facts and circumstances of the case in making an adjustment of  .....

X X X X X X X

Full Text of the Document

X X X X X X X

PO's order giving effect to DRP directions is in explicit contradiction to said directions of DRP. 14. On the facts and in the circumstances of the case, the DRP/ AO did not consider the fact that interest under section 2348 is not applicable in the case of DEC basis various judicial pronouncements. 15. On the facts and in the circumstances of the case, the DRP/ AO erred in failing to appreciate that no refund of ₹ 3,692,930 was granted to the company for AY 2011-12 but confirmed levying interest under section 234D of the Act of ₹ 720, 121. 16. On the facts and in the circumstances of the case, the AO in the impugned order has erred in adding back the refund issued of ₹ 3,692,930, when in fact no refund has been granted to the appellant. 17. On the facts and in the circumstances of the case, the AO in the impugned order has erred in levying interest under section 2348 and 234D of the Act of ₹ 9,521,808 and ₹ 720,121 respectively. 18. On the facts and in the circumstances of the case, the AO in the impugned order has erred in adding back the TDS credit of ₹ 3,451,340 claimed by the appellant. 19. On the facts and circumstances of the case and .....

X X X X X X X

Full Text of the Document

X X X X X X X

er to the TPO, in the eyes of law is factually incorrect. On the arguments that no specific international transactions has been referred by the Assessing Officer to the TPO as mandated by Section 92CA of the Act, it was submitted that only M/s Dongfang Electric, Kolkata, Project office was referred as all the transactions done by it are international transactions. He vehemently contended that, there is no requirement in law that international transactions have to be mentioned by the Assessing Officer. He filed written submissions in support of the contention that, M/s. Dongfang Electric, Kolkata, project office in this case has to be considered as an Associate Enterprise of the parent company located in the Republic of China and consequently all the transactions between them are international transactions which are subject to scrutiny by the TPO. 4.2. On the issue as to which is the Most Appropriate Method, i.e., CUP or TNMM, the ld. D/R, relied on the order of the Assessing Officer as well as the Ld. DRP and supported the same. On the issue of comparables, he relied on the order of the ld. TPO. 5. In reply, the ld. Counsel for the assessee submitted that the language of the Act is .....

X X X X X X X

Full Text of the Document

X X X X X X X

tion to the said international transaction, u/s 92CA of the Act, to the TPO, after obtaining approval from the Commissioner or from the Principal Commissioner. 6.2. Thus, what has to be referred by the Assessing Officer is the computation of ALP in relation to the said international transaction. No letter or correspondence making the reference to the TPO by the Assessing Officer is produced before us. Moreover, the approval was taken from the DIT(IT)-Kolkata, for referring M/s. Dongfang Electric, Kolkata Project Office to the TPO and not any international transactions. The TPO, in this case tried to identify the international transactions that the assessee has entered into and then proceeded to determine the ALP. No international transaction was identified by the Assessing Officer and referred to the TPO after taking approval of the DIT (International Taxation). The assessee s case is that there is no international transaction on the facts of his case. This aspect should have been adjudicated and approval taken from the appropriate authority. Thus, the mandate of the Section has not been followed by the Assessing Officer. Hence we have no other alternative but to hold that the refe .....

X X X X X X X

Full Text of the Document

X X X X X X X

 

 

← Previous Next →

 

 

Discussion Forum
what is new what is new
 


|| Home || About us || Feedback || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.
|| Blog || Site Map - Recent || Site Map ||