2012 (12) TMI 1015 - AT - Income Tax

Summary

Issues Involved:
1. Transfer Pricing (TP) adjustments.
2. Non-recording of carry forward of short-term capital loss, business loss, and unabsorbed depreciation.
3. Issuance of refund with interest.

Summary of Judgment:

Issue 1: Transfer Pricing Adjustments
The primary issue pertains to the addition of Rs. 8,195,981 to the appellant's total income based on the provisions of Chapter X of the Income-tax Act. The Transfer Pricing Officer (TPO) and the Dispute Resolution Panel (DRP) equated the marketing support services rendered by the appellant with the fund management services rendered by Deutsche Asset Management (Asia) Limited. The TPO used internal controlled transactions to benchmark another controlled transaction entered into by the appellant with its associated enterprise. The TPO ignored the Net Cost Plus (NCP) mark-up computation for 'non-binding advisory services' submitted by the appellant and arbitrarily rejected it. The DRP upheld the TPO's decision, leading to the addition.

The Tribunal found that the services provided by the appellant were different from those provided by Deutsche Asset Management (Asia) Limited. The Tribunal accepted the Arm's Length Price (ALP) arrived at by the appellant and directed the Assessing Officer (AO) to delete the addition made. Grounds no. 1 to 7 were allowed in favor of the appellant.

Issue 2: Non-recording of Carry Forward of Losses and Depreciation
Grounds no. 8(a) & (b) pertain to the non-recording of carry forward of short-term capital loss of Rs. 2,80,215, business loss of Rs. 2,86,78,070, and brought forward depreciation of Rs. 21,02,819. The Tribunal directed the AO to verify the facts and pass an appropriate order in accordance with the law after allowing a reasonable opportunity to the appellant. Grounds no. 8(a) & (b) were treated as allowed for statistical purposes.

Issue 3: Issuance of Refund with Interest
Grounds no. 9 & 10 concern the direction to be given to the AO to allow a refund along with interest up to date. The Tribunal noted that the issue does not emanate from the orders of the authorities below and refrained from taking any decision on these issues.

Conclusion
The appeal was partly allowed, with the Tribunal directing the deletion of the TP adjustment and remanding the issue of carry forward of losses and depreciation for verification. No decision was made regarding the issuance of a refund with interest. The order was pronounced in the open Court on 12/12/2012.