TMI Blog2020 (1) TMI 722X X X X Extracts X X X X X X X X Extracts X X X X ..... r even if available, were not considered by them. Since, learned DRP has made a categorical observation that various evidences were not furnished by the assessee to support its claim, we are of the view that the entire issue relating to assessee s claim of Sales Tax refund / subsidy being a capital receipt requires fresh consideration in the light of various documentary evidences, including, the MoU between the Government of Maharashtra and M M. Further, the assessee is also required to meet the allegation of learned DRP that various documentary evidences were not furnished to support its claim. The assessee is also required to properly explain the impact of the observations made in Annexure C to the eligibility certificate regarding eligibility of the assessee for payment of IPS. Since, all these aspects have not been considered properly for whatever may be the reason, we are inclined to restore this issue to the file of the Assessing Officer for de novo adjudication after providing reasonable opportunity of being heard to the assessee. The assessee is at liberty to furnish further evidences, if required, to prove its claim. The Assessing Officer must consider not only the evidenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sul Ltda. (MWM) is the original developer of the Base Engine Intellectual property relating to certain variety of Engines. MWM has sub licensed, the IPR to the assessee through Navistar Luxemburg. The license, knowhow relates to technical/functional assets as well as improvement and upgrades to be given to the assessee for manufacture and sale of engines in India. The Transfer Pricing Officer further found that for providing the knowhow, etc., the assessee has paid an amount of ₹ 54,50,830, towards royalty to the AE. From the transfer pricing study report, the Transfer Pricing Officer found that the assessee has benchmarked the ALP of the royalty by using Comparable Uncontrolled Price (CUP) method. When called upon to justify the ALP of royalty payment, the assessee submitted that as per Reserve Bank of India guidelines, royalty @ 5% of 8% can be paid. Thus, it was submitted that the rate prescribed by the RBI can be considered as CUP. Additionally, it was submitted that as per the search conducted in royaltystat database, eight comparables were selected and the royalty paid by the assessee to the AE was found to be at arm s length keeping in view the royalt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... additional evidence and proceeded to observe that the report was unauthenticated in as much as it was unsigned and did not contain seal of the reporting party. We have gone through the copy of the said report submitted. We find that the said report is submitted by Altus International. It contains covering letter which contains full address and website address of the firm. Based on the report of Altus International, range of royalty rate is also mentioned in the covering letter. It has duly been signed by the partner of the firm. It also contains contact persons and phone number for any question regarding report. In these circumstances, in our considered opinion, rejection by DRP of the benchmarking report submitted by the assessee is not sustainable. In our considered opinion if authorities below have any doubt about the authenticity of the document, same could have very well inquired from the address and phone number mentioned therein. Hence in our considered opinion, interest of justice demands that this issue may be remitted to the TPO. Learned TPO is directed to consider this issue afresh in accordance with our direction and observation as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee for availing Sales Tax refund / subsidy. Therefore, they rejected the objections of the assessee. 11. The learned Authorised Representative submitted, the assessee is a subsidiary of Mahindra Mahindra Ltd. He submitted, Mahindra Mahindra entered into an Memorandum of Understanding (MoU) with the Government of Maharashtra for setting up of a separate subsidiary company as a special purpose vehicle (SPV) to manufacture and sale new generation vehicles, engines, transmission and other aggregates and medium/ heavy commercial vehicles. He submitted, the MoU also provided that Mahindra Mahindra can have separate joint venture arrangement for manufacture of medium and heavy commercial vehicles and separately for manufacture of engine for these medium and heavy commercial vehicles and for manufacturing earth moving and construction equipment. For this purpose, manufacturing facilities were set up in the industrial area of Chakan in the District of Pune. He submitted, as per the terms of MoU, the Government of Maharashtra also agreed to provide incentive as per industrial promotion subsidy (IPS) scheme towards eligible investment in the project. He submit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of learned Commissioner (Appeals) in treating IPS as a capital receipt. Thus, he submitted, IPS/Sales Tax refund received by the assessee is not taxable. 12. The learned Departmental Representative, strongly relying upon the observations of the Assessing Officer and learned DRP submitted, as per the material on record, the eligibility certificate for grant of IPS was issued in the name of MVML and IPS was also granted to MVML. He submitted, IPS was never granted by the Government to the assessee. He submitted, due to an arrangement between MVML, the assessee might have received a part of IPS, however, it cannot be equated with IPS given by the Government of Maharashtra under the subsidy scheme. Drawing our attention to the eligible certificate submitted in the paper book, the learned Departmental Representative submitted, even as per the eligibility certificate no IPS is allowable to the assessee. Thus, he submitted, the claim of the assessee was rightly rejected and the amount was brought to tax. 13. We have considered rival submissions and perused the material on record. Undisputedly, the Assessing Officer has rejected assessee s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see to some extent appears to be acceptable. Therefore, merely because the eligibility certificate has been issued in the name of the SPV, it cannot be said that the entire eligible investment has been made by the SPV. In fact, a reference to Annexure B to of the eligibility certificate, a copy of which is placed at Page 536 of the paper book, would reveal that it lists the details of investment made by the SPV (MVML) as well as other companies including the assessee for the project. Therefore, assessee s claim that it is also eligible for Sales Tax refund / subsidy under IPS carries some strength. If the assessee as a part of consortium has invested in the project, it is eligible for grant of incentive / subsidiary as permissible under the IPS. 14. However, at this stage, it is necessary to consider the submissions of learned Departmental Representative that Annexure C to the eligibility certificate does not provide for any subsidy to the assessee. On a reference to Annexure C of the eligibility certificate placed in the paper book, it is seen that the authority concerned has not allocated any IPS to the assessee on the reasoning that the fixed ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supporting evidence. Though, the paper book submitted before us contains agreements between the assessee and MNVL for sharing of IPS, however, it does not contain the MoU between the Government of Maharashtra and M M. Though, a copy of the aforesaid MoU was filed before us in the course of hearing, however, we are not sure whether it was filed before the Departmental Authorities as it has not been referred to either by the Assessing Officer or by learned DRP. After carefully perusing the orders of the Departmental Authorities and considering the submissions of the parties, we are of the view that various documentary evidences which are part of record before us were either not available before the Departmental Authorities or even if available, were not considered by them. Since, learned DRP has made a categorical observation that various evidences were not furnished by the assessee to support its claim, we are of the view that the entire issue relating to assessee s claim of Sales Tax refund / subsidy being a capital receipt requires fresh consideration in the light of various documentary evidences, including, the MoU between the Government of Maharashtra and M M. Further, the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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