2018 (8) TMI 1196 - AT - Income Tax

Transfer pricing - adjustments towards profit attributable to the assessee in connection with sale of intangible assets by adopting the profits split method - Held that - there is no international transaction during the relevant AY and the addition made by the AO is accordingly deleted. - Following the decision in the case of DQ ENTERTAINMENT INTERNATIONAL LTD. 2018 (1) TMI 726 - ITAT HYDERABAD , decided in favor of assessee.

Summary

Issues involved:
1. Adjustment of profit under the profit Split Method for the sale of intangible assets to AE.
2. Consideration of MAT credit eligibility.
3. Consideration of foreign tax credit eligibility.
4. Levying and computing interest under sections 234B and 234C of the Act.

Issue 1: Adjustment of profit under the profit Split Method for the sale of intangible assets to AE:
The assessee appealed against the assessment order, challenging the adjustment of ?2,20,99,958 as profit attributable to the appellant company under the profit Split Method for selling intangible assets to its AE. The assessee argued that the intangible assets were sold to the AE at Arm's Length Price in earlier years, and thus, no further adjustment was required. The Tribunal, after considering the submissions and previous orders, held in favor of the assessee, stating that there was no international transaction during the relevant financial year, similar to previous findings. Consequently, the addition made by the AO was deleted, and Ground Nos. 2 & 3 were allowed.

Issue 2: Consideration of MAT credit eligibility:
The assessee contended that the Minimum Alternate Tax (MAT) credit under section 115JAA, for which the appellant was genuinely eligible, was not provided by the AO. However, during the hearing, the assessee chose not to press this ground, and it was rejected. The Tribunal did not adjudicate on this ground as it was considered general in nature.

Issue 3: Consideration of foreign tax credit eligibility:
The assessee claimed eligibility for a foreign tax credit of ?30,24,095 under sections 90/90A, which the appellant was genuinely entitled to. Similar to the MAT credit issue, the assessee decided not to press this ground during the hearing, and it was rejected. The Tribunal did not provide further adjudication on this ground, considering it general in nature.

Issue 4: Levying and computing interest under sections 234B and 234C of the Act:
The AO was found to have erred in levying and computing interest under sections 234B and 234C of the Act. The assessee did not press this ground during the hearing, and it was rejected. The Tribunal did not delve into this issue further, deeming it general in nature.

In conclusion, the Appellate Tribunal, ITAT Hyderabad, in its judgment, addressed various issues raised by the assessee regarding the assessment order passed under the Income Tax Act. The Tribunal ruled in favor of the assessee on the adjustment of profit under the profit Split Method, stating that no international transaction existed during the relevant financial year. However, the Tribunal did not adjudicate on the MAT credit eligibility, foreign tax credit eligibility, and the levying of interest under sections 234B and 234C, as the assessee chose not to press these grounds during the hearing.