9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (7) TMI 1955 - AT - Income TaxTP adjustment - international transactions pertaining to intra-group services received by the assessee (i.e. MSU charges, G A charges, payroll expenses and joint acquisition and development of IT infrastructure and software) were benchmarked by the assessee applying Transactional Net Margin Method ('TNMM') - HELD THAT - As decided in own case 2017 (4) TMI 1145 - ITAT DELHI we deem it necessary to remand this issue to ld. DRP to decide afresh to benchmark the international transactions undertaken by the taxpayer by applying the TNMM as MAM by providing an opportunity of being heard to the taxpayer TP adjustment on account of interest on payment of loan - assessee submitted that in terms of the PSC, the assessee is required to contribute its share of the funds for the planned activities under the work program - HELD THAT - As decided in own case 2017 (4) TMI 1145 - ITAT DELHI whatever has been stated by the Ld. Transfer Pricing Officer without applying the provisions of law to the facts of the case before them. In view of this we set aside the whole matter of determination of ALP of interest paid by the Assessee to its associated enterprise back to the file of the Ld. Transfer Pricing Officer with a direction to examine the computation of ALP by the Assessee of above transaction strictly in accordance with the provisions of section 92C of the Income Tax Act considering the evidences placed by the Assessee before him and then decide the issue of adjustment, if any, on merits. Disallowance of branch office expenditure by treating the same as preoperative expenditure - expenses allowable under section 37(1) - HELD THAT - We find identical issue had come up before the Tribunal in assessee s own case as held Assessing Officer nor the Ld. Departmental Representative could press any other judicial precedent which shows that amount spent by the assessing is not allowable as revenue expenditure under section 37 (1) of the act. It is also not the argument of the revenue that such expenditure incurred by the Assessee is capital in nature. Furthermore, the Ld. AR has also pressed into several decisions which say that that expenses incurred towards extension of business which was subsequently abandon or did not fructify, are allowable. Therefore in view of the above decisions wherein it is been held that the expenses for purchase of this kind of data is unnecessary revenue expenditure required to be incurred by the Assessee for the purpose of its business and hence is allowable as revenue expenditure, we also direct the Ld. Assessing Officer to allow the expenditure incurred by the Assessee on purchase of data and other relevant expenses Disallowance of expenditure incurred on non-producing PSC - HELD THAT - Taxpayer has brought on record the complete details of the expenditure incurred and there is no dispute between the parties to the appeal that all the expenses have been incurred for furtherance of its business, though incurred in support to the PSC contracts executed by the taxpayer, the same cannot be disallowed merely on the ground that it is not shared by others, particularly, when it is not disputed that these expenses have been incurred wholly and exclusively for the purpose of business of taxpayer. AO has not disputed the incurrence of expenses for the purpose of business. Even otherwise, the expenses incurred by the taxpayer for furtherance of its business cannot be disallowed merely on the ground that the other party in the joint venture has not agreed to share the particular cost incurred by one party to the joint venture. So, following the decision rendered by the coordinate Bench of the Tribunal in taxpayer s own case for AY 2010-11 , the disallowance made by the AO/DRP is not sustainable in the eyes of law Disallowance of expenses paid by the assessee to BGIL - expenses not borne by the operator board of the PSC and, therefore, cannot be allowable as deduction to the extent of 5% of adjusted total income in terms of section 44C - HELD THAT - identical issue had come up before the Tribunal in assessee s own case in the immediately preceding assessment year and the Tribunal has allowed the claim of the assessee at para 31 of the order holding that cost of services availed by the assessee from its group company cannot be disallowed in the hands of the assessee merely because the said expenditure has not been borne by the J.V. Partners. It is an admitted fact that the Assessing Officer/TPO/DRP had not the benefit the order of the Tribunal which was passed subsequent to the orders passed by them. Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore this issue to the file of the Assessing Officer/TPO for adjudication of the issue afresh. Disallowance of depreciation of Panna Well Cost - HELD THAT - We deem it proper to restore the issue to the file of the Assessing Officer with a direction to give an opportunity to the assessee to substantiate his case as per the direction of the DRP. The Assessing Officer shall decide the issue as per fact and law after giving due opportunity of being heard to the assessee. We hold and direct accordingly. Disallowance of depreciation on the IT infrastructure and software - HELD THAT - Since the assessee in the instant case has not filed the documentary evidences before the Assessing Officer substantiating that the assets were put to use for the business of the assessee, therefore, we in the interest of justice deem it proper to restore the issue to the file of the Assessing Officer/TPO to adjudicate the issue afresh after giving due opportunity of being heard to the assessee. While doing so, the Assessing Officer/TPO shall keep in mind the order of the Tribunal in assessee s own case in the immediately preceding assessment year. Disallowance of interest expenses as capital in nature - HELD THAT - This issue should be restored to the file of the Assessing Officer for proper verification. We therefore restore the issue to the file of the Assessing Officer/TPO with a direction to verify the details and adjudicate the issue afresh after giving due opportunity of being heard to the assessee Additional depreciation u/s 32(1)(iia) on the new plant and machinery purchased and put to use during the relevant assessment year - AO and the DRP did not admit the claim of the assessee on the ground that such claim can be made only by way of filing a revised return of income - HELD THAT - CIT(A) having coextensive power over the assessment could deal with the claim made for the first time during the course of assessment proceedings and (b) it is open to the assessee to enlarge the claim before the Assessing Officer through a letter filed during the course of assessment proceedings without filing a revised return of income. In view of the same, we deem it proper to restore the issue to the file of the Assessing Officer with a direction to verify the allowability of the claim and if the assessee is otherwise eligible for such additional depreciation then allow the same. Short credit of TDS - HELD THAT - We restore the issue to the file of the Assessing Officer with a direction to verify the same and allow the TDS credit as per law. Interest charged u/s 234B - HELD THAT - The Finance Act, 2012 w.e.f. 1.4.2012 added proviso below section 209(1)(d) , the said proviso in our opinion is applicable from assessment year 201314 and is, therefore, prospective in operation. The insertion of the proviso cannot be construed to have retrospective effect so to expose a non-resident company to levy of interest u/s 234B of the Act for assessment years prior to assessment year 2013-14, where tax was deductible at source on the income payable to the non-resident, if such income is held to be chargeable to tax in India. Accordingly, this ground raised by the assessee is allowed. Interest u/s 234C - same is leviable only on the returned income and not on the assessed income as held in various decisions. We therefore direct the Assessing Officer to compute the interest u/s 234C on the basis of the returned income.
Issues Involved:
1. Proceedings barred by limitation. 2. Rejection of Transactional Net Margin Method (TNMM) and selection of Comparable Uncontrolled Price (CUP) Method. 3. Erroneous application of CUP method. 4. Disregarding directions of the DRP for previous years. 5. Questioning commercial expediency of the Appellant. 6. Application of CUP for determining arm's length interest rate. 7. Disallowance of payment towards intra-group services. 8. Disregarding multiple year data. 9. Disallowance of branch office expenditure. 10. Disallowance of expenditure on non-producing Production Sharing Contracts (PSCs). 11. Disallowance of exploration expenditure written off. 12. Disallowance of head office expenditure. 13. Disallowance of depreciation on Panna-Mukta Well Cost. 14. Disallowance of depreciation on global IT & T expenditure. 15. Disallowance of interest expenses. 16. Non-grant of additional depreciation. 17. Violation of principles of natural justice. 18. Short credit for Tax deducted at source. 19. Levy of interest under sections 234B and 234C. 20. General objections. Detailed Analysis: 1. Proceedings barred by limitation: The ground was not pressed by the assessee and hence dismissed as not pressed. 2. Rejection of TNMM and selection of CUP Method: The Tribunal found that the issue had been decided in favor of the assessee in the previous years. The Tribunal directed the DRP to adjudicate the issue afresh in light of the earlier decision that upheld the use of TNMM as the most appropriate method. 3. Erroneous application of CUP method: The Tribunal restored the issue to the file of the DRP for fresh adjudication, following the decision in the previous year which found the application of CUP method erroneous. 4. Disregarding directions of the DRP for previous years: The Tribunal noted that the facts and circumstances remained the same as in previous years where the directions of the DRP were followed. The issue was restored for fresh adjudication. 5. Questioning commercial expediency of the Appellant: The Tribunal held that the TPO should not question the business decisions of the assessee. The Tribunal restored the issue to the file of the DRP for fresh adjudication. 6. Application of CUP for determining arm's length interest rate: The Tribunal found that the TPO had not performed his duty of determining the arm's length price of interest payment but had instead questioned the business decision. The Tribunal restored the issue to the file of the TPO for fresh adjudication. 7. Disallowance of payment towards intra-group services: The Tribunal found that the intra-group services were closely linked to the main business activity and should be benchmarked together using TNMM. The issue was restored to the DRP for fresh adjudication. 8. Disregarding multiple year data: The Tribunal restored the issue to the DRP for fresh adjudication in light of the decision in the previous year which allowed the use of multiple year data. 9. Disallowance of branch office expenditure: The Tribunal found that the expenses were incurred for the purpose of the business and allowed the claim. The issue was decided in favor of the assessee. 10. Disallowance of expenditure on non-producing PSCs: The Tribunal allowed the claim, stating that the expenses were incurred for the purpose of the business and should be allowed under section 37(1). The issue was decided in favor of the assessee. 11. Disallowance of exploration expenditure written off: The Tribunal allowed the claim, stating that the expenses were incurred for the purpose of the business and should be allowed under section 37(1). The issue was decided in favor of the assessee. 12. Disallowance of head office expenditure: The Tribunal restored the issue to the file of the Assessing Officer/TPO for fresh adjudication in light of the decision in the previous year which allowed the claim. 13. Disallowance of depreciation on Panna-Mukta Well Cost: The Tribunal restored the issue to the file of the Assessing Officer for fresh adjudication, directing to verify the invoices, bills, etc., as per the direction of the DRP. 14. Disallowance of depreciation on global IT & T expenditure: The Tribunal restored the issue to the file of the Assessing Officer/TPO for fresh adjudication, directing to verify the documentary evidence and consider the Tribunal's decision in the previous year. 15. Disallowance of interest expenses: The Tribunal restored the issue to the file of the Assessing Officer/TPO for fresh verification and adjudication. 16. Non-grant of additional depreciation: The Tribunal restored the issue to the file of the Assessing Officer to verify the allowability of the claim and allow the same if the assessee is eligible. 17. Violation of principles of natural justice: The ground was not pressed by the assessee and hence dismissed as not pressed. 18. Short credit for Tax deducted at source: The Tribunal restored the issue to the file of the Assessing Officer to verify and allow the TDS credit as per law. 19. Levy of interest under sections 234B and 234C: The Tribunal directed the Assessing Officer not to charge interest under section 234B on the income of the assessee which is subject to tax deduction at source. Interest under section 234C should be computed on the basis of the returned income. 20. General objections: The ground was not pressed by the assessee and hence dismissed as not pressed. Conclusion: The Tribunal allowed the appeal partly for statistical purposes and restored several issues to the file of the DRP/Assessing Officer/TPO for fresh adjudication in light of the decisions in the previous years and after giving due opportunity of being heard to the assessee.
|
