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TMI Blog2009 (7) TMI 862X X X X Extracts X X X X X X X X Extracts X X X X ..... ned on loans ought to have been treated as part of the business income for the purposes of computation of deduction under section 80HHC of the Act - Direct the Assessing Officer to modify the claim of deduction under section 80HHC of the Act. - IT APPEAL NOS. 1073 & 1117 (PUNE) OF 2007 - - - Dated:- 30-7-2009 - PRAMOD KUMAR, MUKUL SHRAWAT, JJ. C.H. Naniwadekar for the Appellant. Smt. Manju Ajwani for the Respondent. ORDER Pramod Kumar, Accountant Member. These cross-appeals are directed against CIT(A)'s order dated 13-6-2007 in the matter of assessment under section 143(3) of the Income-tax Act, 1961 for assessment year 2004-05. As these appeals were heard together, pertain to the same assessee, involve grievances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... price situation." 3. The material facts giving rise to the dispute before us are like this. The assessee before us is a manufacturer of industrial process pumps. This is the joint venture between Kirloskar Brothers Ltd., an Indian company and M/s Ebara Corporation, Japan. During the relevant previous year, the assessee, inter alia, made payments of royalty to its Japanese collaborator i.e., Ebara Corporation. A reference was made by the Assessing Officer under section 92CA(1) of the Act for determination of ALP with reference to transaction related in Form No. 3CEB. One of the payments, which were made by the assessee, was for royalty amounting to Rs. 1,92,09,696. The royalty so paid was computed at 4 per cent on sales made to third party ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held the adjustment in ALP by holding that 3 per cent royalty payment is ALP, revenue is aggrieved that the CIT(A) erred in ignoring the fact that the payment of research and development cess was liability of the assessee and therefore, the Assessing Officer appropriately made the adjustment in respect thereof in the computation of ALP. 4. We have heard the rival contentions, perused the material on record the factual matrix of the case as also the applicable legal position. 5. As far as the grievance of the revenue is concerned, we are unable to see any substance in the same. Learned CIT(A) has given a categorical finding that under section 3(2) of Research and Development Cess Act, 1986 the cess is payable to the Central Government b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hus incorrect. The only basis of adjustment made by the TPO was variation in rates of royalty paid by the assessee vis-a-vis the two Chinese companies. As we have noted above, this comparison is unsustainable. In this view of the matter, as also bearing in mind the entirety of the case, we direct the Assessing Officer to delete the impugned adjustment in ALP of royalty paid by the assessee to Ebara Corporation, Japan. This ground of the assessee thus succeeds. 7. As regards ground No. 2 raised by the assessee, learned counsel fairly states that he does not wish to press the same as he has been granted depreciation in respect of software in question. Ground No. 2 is thus dismissed. 8. In ground No. 3 the assessee's grievance is that for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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