ITR (TRIB) VOL 15 PART 3

 

ITR'S TRIBUNAL TAX REPORTS (ITR (TRIB))

Volume 15 : Part 3 (Issue dated : 23-4-2012)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

Advance tax --Interest--Mandatory--Income-tax Act, 1961, s. 234B-- Symantec Software Solutions P. Ltd. v. Asst. CIT (Mumbai) . . . 323

Business expenditure --Expenditure on account of recruitment and training expenses, advertisement and sales promotion expenses--To be allowed--Income-tax Act, 1961, s. 37-- Sapient Corporation P. Ltd. v. Deputy CIT (Delhi) . . . 285

Depreciation --Unabsorbed depreciation--Set off of brought forward loss and un-absorbed depreciation--Assessing Officer to determine--Income-tax Act, 1961-- Marubeni India P. Ltd. v. Addl. CIT (Delhi) . . . 297

Export --Special deduction under section 80HHC--Computation of export turnover--Excise duty and sales tax to be excluded from total turnover--Income-tax Act, 1961, s. 80HHC-- Cummins India Ltd. v. Deputy CIT (Pune) . . . 252

----Special deduction under section 80HHC--Computation of special deduction--Income from scrap, sale, discount and commission, inspection etc.--Matter remanded--Income-tax Act, 1961, s. 80HHC-- Cummins India Ltd. v. Deputy CIT (Pune) . . . 252

Interest income --Whether business income--Matter remanded-- Marubeni India P. Ltd. v. Addl. CIT (Delhi) . . . 297

International transaction --Arm's length price--Benefit of proviso to section 92C--Assessee exceeding permissible limit and falling outside arm's length range--Benefit not available--Income-tax Act, 1961, s. 92C-- Marubeni India P. Ltd. v. Addl. CIT (Delhi) . . . 297

----Arm's length price--Business promotion expenses--Expenditure of personal nature--To be excluded from operating cost--Income-tax Act, 1961-- Marubeni India P. Ltd. v. Addl. CIT (Delhi) . . . 297

----Arm's length price--Claim for risk adjustment--No evidence that details exhibiting risk borne by comparables--Assessee not entitled to benefit of risk adjustment--Income-tax Act, 1961, s. 92D--Income-tax Rules, 1962, r. 10D-- Marubeni India P. Ltd. v. Addl. CIT (Delhi) . . . 297

----Arm's length price--Compensation for closure of business branches--Closure of branch has direct link with international transaction--To be included in operating cost--Income-tax Act, 1961-- Marubeni India P. Ltd. v. Addl. CIT (Delhi) . . . 297

----Arm's length price--Determination--Transactional net margin method--Comparison of net margin realised by associated enterprise from international transactions not comparison of operating margins at enterprise level--Transfer Pricing Officer--Entitled to consider information in public domain updated at time of assessment--That assessee had no access to it at time of making transfer pricing report--Not material--Data relating to financial year in which transaction entered into to be considered--Not of multiple years--Unless assessee makes out case--Exclusion of comparables--Only in case of abnormal differences on account of turnover--Income received from associated enterprise computed applying Chapter X--Subsequent claim of bad debt or business loss not allowable--Benefit of five per cent. margin--Available for years prior to amendment--Income-tax Act, 1961, ss. 92C, 92CA(3), 144C--Income-tax Rules, 1962, r. 10B-- Symantec Software Solutions P. Ltd. v. Asst. CIT (Mumbai) . . . 323

----Arm's length price--General recession in international market--Transfer Pricing Officer considering results of comparable cases and recommending adjustment--Proper--Income-tax Act, 1961-- Marubeni India P. Ltd. v. Addl. CIT (Delhi) . . . 297

----Arm's length price--Telephone expenses--No material to show that amount directly interlinked with international transaction--To be excluded from calculation of operating cost--Income-tax Act, 1961, s. 92CA-- Marubeni India P. Ltd. v. Addl. CIT (Delhi) . . . 297

----Computation of arm's length price--Net margin of operating income--Only operating income and operating expenses for relevant business activity to be taken into consideration--Matter remanded--Income-tax Act, 1961-- TNT India P. Ltd. v. Asst. CIT (Bangalore) . . . 263

----Computation of arm's length price--Section 92C(2) applicable--Income-tax Act, 1961, s. 92C(2)-- TNT India P. Ltd. v. Asst. CIT (Bangalore) . . . 263

----Computation of arm's length price--Use of multiple years' data--Relevant only if pricing pattern of assessee for relevant financial year has been influenced by market conditions--Assessee in business of courier services, not affected by market fluctuation--Multiple years' data not to be considered--Income-tax Rules, 1962, r. 10B-- TNT India P. Ltd. v. Asst. CIT (Bangalore) . . . 263

----Determination of arm's length price--Reference to Transfer Pricing Officer--Assessing Officer need not demonstrate avoidance of tax or existence of circumstances in clauses (a) to (d) of section 92C(3) before making reference--Income-tax Act, 1961, ss. 92CA, 92C(3)-- TNT India P. Ltd. v. Asst. CIT (Bangalore) . . . 263

----Transfer pricing--Arm's length price--Comparables--Reference to Transfer Pricing Officer--Interest income not part of operating income of assessee--Income-tax Act, 1961, s. 92CA-- Marubeni India P. Ltd. v. Addl. CIT (Delhi) . . . 297

----Transfer pricing--Computation of arm's length price--Three prices determined involving three comparables--Assessee entitled to deduction not exceeding 5 per cent. out of arithmetic mean--Income-tax Act, 1961, ss. 92C(2), 92CA(3)-- Cummins India Ltd. v. Deputy CIT (Pune) . . . 252

----Transfer pricing--Determination of arm's length price--Expenses on projects undertaken by assessee--Not related to international transactions of assessee--To be excluded--Income-tax Act, 1961-- Marubeni India P. Ltd. v. Addl. CIT (Delhi) . . . 297

Transfer pricing --International transaction--Computation of arm's length price--Comparable--Enterprise showing super profit--Not to be treated as comparable--Otherwise difference less than 5 per cent.--No adjustment needed--Income-tax Act, 1961, s. 92C-- Sapient Corporation P. Ltd. v. Deputy CIT (Delhi) . . . 285

----International transaction--Determination of arm's length price--Reference to Transfer Pricing Officer--Dispute Resolution Panel--Comparable companies--Factual findings not recorded by Transfer Pricing Officer--Matter remanded--Income-tax Act, 1961, s. 92C-- Avaya India P. Ltd. v. Asst. CIT (Delhi) . . . 237

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Income-tax Act, 1961 :

S. 37 --Business expenditure--Expenditure on account of recruitment and training expenses, advertisement and sales promotion expenses--To be allowed-- Sapient Corporation P. Ltd. v. Deputy CIT (Delhi) . . . 285

S. 80HHC --Export--Special deduction under section 80HHC--Computation of export turnover--Excise duty and sales tax to be excluded from total turnover-- Cummins India Ltd. v. Deputy CIT (Pune) . . . 252

----Export--Special deduction under section 80HHC--Computation of special deduction--Income from scrap, sale, discount and commission, inspection etc.--Matter remanded-- Cummins India Ltd. v. Deputy CIT (Pune) . . . 252

S. 92C --International transactions--Arm's length price--Benefit of proviso to section 92C--Assessee exceeding permissible limit and falling outside arm's length range--Benefit not available-- Marubeni India P. Ltd. v. Addl. CIT (Delhi) . . . 297

----International transactions--Arm's length price--Determination--Transactional net margin method--Comparison of net margin realised by associated enterprise from international transactions not comparison of operating margins at enterprise level--Transfer Pricing Officer--Entitled to consider information in public domain updated at time of assessment--That assessee had no access to it at time of making transfer pricing report--Not material--Data relating to financial year in which transaction entered into to be considered--Not of multiple years--Unless assessee makes out case--Exclusion of comparables--Only in case of abnormal differences on account of turnover--Income received from associated enterprise computed applying Chapter X--Subsequent claim of bad debt or business loss not allowable--Benefit of five per cent. margin--Available for years prior to amendment-- Symantec Software Solutions P. Ltd. v. Asst. CIT (Mumbai) . . . 323

----Transfer pricing--International transaction--Computation of arm's length price --Comparable--Enterprise showing super profit--Not to be treated as comparable--Otherwise difference less than 5 per cent.--No adjustment needed-- Sapient Corporation P. Ltd. v. Deputy CIT (Delhi) . . . 285

----Transfer pricing--International transaction--Determination of arm's length price --Reference to Transfer Pricing Officer--Dispute Resolution Panel--Comparable companies--Factual findings not recorded by Transfer Pricing Officer--Matter remanded-- Avaya India P. Ltd. v. Asst. CIT (Delhi) . . . 237

S. 92C(2) --International transaction--Transfer pricing--Computation of arm's length price--Three prices determined involving three comparables--Assessee entitled to deduction not exceeding 5 per cent. out of arithmetic mean-- Cummins India Ltd. v. Deputy CIT (Pune) . . . 252

----International transactions--Computation of arm's length price--Section 92C(2) applicable-- TNT India P. Ltd. v. Asst. CIT (Bangalore) . . . 263

S. 92C(3) --International transactions--Determination of arm's length price--Reference to Transfer Pricing Officer--Assessing Officer need not demonstrate avoidance of tax or existence of circumstances in clauses (a) to (d) of section 92C(3) before making reference-- TNT India P. Ltd. v. Asst. CIT (Bangalore) . . . 263

S. 92CA --International transactions--Arm's length price--Telephone expenses--No material to show that amount directly interlinked with international transaction--To be excluded from calculation of operating cost-- Marubeni India P. Ltd. v. Addl. CIT (Delhi) . . . 297

----International transactions--Determination of arm's length price--Reference to Transfer Pricing Officer--Assessing Officer need not demonstrate avoidance of tax or existence of circumstances in clauses (a) to (d) of section 92C(3) before making reference-- TNT India P. Ltd. v. Asst. CIT (Bangalore) . . . 263

----International transactions--Transfer pricing--Arm's length price--Comparables--Reference to Transfer Pricing Officer--Interest income not part of operating income of assessee-- Marubeni India P. Ltd. v. Addl. CIT (Delhi) . . . 297

S. 92CA(3) --International transaction--Transfer pricing--Computation of arm's length price--Three prices determined involving three comparables--Assessee entitled to deduction not exceeding 5 per cent. out of arithmetic mean-- Cummins India Ltd. v. Deputy CIT (Pune) . . . 252

----International transactions--Arm's length price--Determination--Transactional net margin method--Comparison of net margin realised by associated enterprise from international transactions not comparison of operating margins at enterprise level--Transfer Pricing Officer--Entitled to consider information in public domain updated at time of assessment--That assessee had no access to it at time of making transfer pricing report--Not material--Data relating to financial year in which transaction entered into to be considered--Not of multiple years--Unless assessee makes out case--Exclusion of comparables--Only in case of abnormal differences on account of turnover--Income received from associated enterprise computed applying Chapter X--Subsequent claim of bad debt or business loss not allowable--Benefit of five per cent. margin--Available for years prior to amendment-- Symantec Software Solutions P. Ltd. v. Asst. CIT (Mumbai) . . . 323

S. 92D --International transactions--Arm's length price--Claim for risk adjustment--No evidence that details exhibiting risk borne by comparables--Assessee not entitled to benefit of risk adjustment-- Marubeni India P. Ltd. v. Addl. CIT (Delhi) . . . 297

S. 144C --International transactions--Arm's length price--Determination--Transactional net margin method--Comparison of net margin realised by associated enterprise from international transactions not comparison of operating margins at enterprise level--Transfer Pricing Officer--Entitled to consider information in public domain updated at time of assessment--That assessee had no access to it at time of making transfer pricing report--Not material--Data relating to financial year in which transaction entered into to be considered--Not of multiple years--Unless assessee makes out case--Exclusion of comparables--Only in case of abnormal differences on account of turnover--Income received from associated enterprise computed applying Chapter X--Subsequent claim of bad debt or business loss not allowable--Benefit of five per cent. margin--Available for years prior to amendment-- Symantec Software Solutions P. Ltd. v. Asst. CIT (Mumbai) . . . 323

S. 234B --Advance tax--Interest--Mandatory-- Symantec Software Solutions P. Ltd. v. Asst. CIT (Mumbai) . . . 323

Income-tax Rules, 1962 :

R. 10B --International transactions--Arm's length price--Determination--Transactional net margin method--Comparison of net margin realised by associated enterprise from international transactions not comparison of operating margins at enterprise level--Transfer Pricing Officer--Entitled to consider information in public domain updated at time of assessment--That assessee had no access to it at time of making transfer pricing report--Not material--Data relating to financial year in which transaction entered into to be considered--Not of multiple years--Unless assessee makes out case--Exclusion of comparables--Only in case of abnormal differences on account of turnover--Income received from associated enterprise computed applying Chapter X--Subsequent claim of bad debt or business loss not allowable--Benefit of five per cent. margin--Available for years prior to amendment-- Symantec Software Solutions P. Ltd. v. Asst. CIT (Mumbai) . . . 323

----International transactions--Computation of arm's length price--Use of multiple years' data--Relevant only if pricing pattern of assessee for relevant financial year has been influenced by market conditions--Assessee in business of courier services, not affected by market fluctuation--Multiple years' data not to be considered-- TNT India P. Ltd. v . Asst. CIT (Bangalore) . . . 263

R. 10D --International transactions--Arm's length price--Claim for risk adjustment--No evidence that details exhibiting risk borne by comparables--Assessee not entitled to benefit of risk adjustment-- Marubeni India P. Ltd. v. Addl. CIT (Delhi) . . . 297