9911796707
TMI Blog2012 (3) TMI 132X X X X Extracts X X X X X X X X Extracts X X X X ..... round is not pressed. 2. Transfer Pricing Adjustment: * The appellant wishes to state that with respect to the international transaction pertaining to the provision of technical assistance and engineering fee to its AEs, there is an existence of similar arrangement between Toyota Motor Corporation (TMC) and Kirloskar Systems Limited (KSL) entered on April 01, 1999. The same can be compared with the international transaction entered by the appellant with TMC. Given the similar nature of technical assistance between TMC and KSL, this transaction can be used as an internal CUP for benchmarking the international transaction between TMC and the appellant for the use of latter's technical assistance as the per diem rates charged are almost identical. * The learned CIT(A) erred in not taking cognizance of the fact that the financial year commencing April 1st 2003 and concluding 31st March 2004 represented a nascent stage in the operations of the appellant and that the loss incurred by the appellant was solely on account of initial stages of operation. The learned CIT(A) also erred in not appreciating the fact that the appellant company had only one operational unit in the financial yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntation charges debited to profit and loss account: * The learned CIT(A) has erred in not adjudicating the double disallowance of the prior period expenditure while upholding the disallowance of system implementation charges debited to the Profit and Loss account. The learned CIT(A) ought to have appreciated that the system implementation charges were incurred for the purpose of administrative functioning of the business and did not bring into existence any asset or advantage of enduring nature. * The learned CITCA) has further not taken cognizance of the appellant's alternative submission that notwithstanding that the said expenditure is revenue in nature, should the said expenditure be disallowed as being capital in nature, then the said expenditure should be allowed to be capitalized and the appellant be granted depreciation on the same. 5. Income earned during construction period amounting to Rs. 26,219,000: * The learned CIT(A) has erred in considering income earned during construction period as income from other sources. * The learned CIT(A) ought to have appreciated that the said receipts are from funds employed attributable to the EOU which was in the construction peri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 326, without appreciating the fact that the expenses incurred were in relation to EOU and that the EOU had not commenced the operation during the year. 4. For these and such other grounds that may be urged at the time of hearing of the appeal, it is prayed that the order of the CIT(A) be set aside and that of the AO restored. 5. The appellant craves to leave/to add/alter/amend and/or delete any of the grounds on or before the hearing of the appeal." 4. From the above grounds it is gathered that the main grievance of both the parties relates to transfer pricing adjustments. 5. The facts in brief are that the assessee filed its return of income on 29.10.2004 declaring a loss of Rs.43,27,88,670, which was processed u/s. 143(1) of the Income-tax Act, 1961 [hereinafter referred to as "the Act" in short"] on 14.3.2005. Subsequently the case was selected for scrutiny. As the assessee opted to join Large Taxpayers Unit (LTU) and submitted the consent before the Chief Commissioner of LTU, the case was transferred u/s. 127 of the Act to LTU. 6. The Assessing Officer after obtaining approval from CIT-III, Bangalore made a reference dated 30.5.2006 u/s. 92CA of the Act for determination o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Since the transaction between TMC and KSL can be considered as comparable with the Appellant's transaction, it is imperative that the same be brought to the attention of the Honorable Tribunal, the Honorable Tribunal being the last fact finding authority. In this regard, the appellant wishes to place before the Honorable Tribunal the following documents: 1. Technical Assistance Agreement between TMC/AISIN TAKAOKA CO.,LTD. (Licensor) and KSL(Licensee) dated April 01, 1999. 2. Letter from TMC dated July 27, 2001 for amending Annexures F-2-1, G-2-2 (training fee paid to TMC) and H-2-1 (dispatching instructor of TMC) to the agreement mentioned in 1 above. 3. Assignment Agreement for Technical Assistance dated June 26, 2002 - for assignment of original agreement (mentioned in 1 above) in the name of the Appellant. 4. Letter from TMC dated October 30, 2002 to Toyota Overseas affiliates indicating the Technical Assistance Rate to the said affiliates We kindly request the Honorable Tribunal to exercise the power vested in it under Rule 29 of The Income Tax Appellate Tribunal Rules and admit the additional evidences as it has crucial bearing on the issues that arise in these appeals." ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l for the assessee requested that the aforesaid additional evidences may be admitted under Rule 29 of the Income-tax Appellate Rules, 1963 because these new evidences are germane for the purpose of determining the tax liability. 13. The ld. DR opposed the admission of additional evidences and submitted that the assessee ought to have filed those documents either before the AO or the ld. CIT(A) and since those documents were not furnished earlier, they shall not be admitted. Alternatively, it was stated that if these are to be admitted, then an opportunity needs to be given to the Assessing Officer. 14. We have considered the submissions of both the parties and carefully gone through the material available on record. In our opinion, the new evidences although furnished by the assessee for the first time before the Tribunal are relevant and go to the root of the present controversy, particularly when the TPO while passing the order for the A.Y. 2007-08 concluded that the international transaction of the assessee with TMC pertaining to payment of technical assistance and engineering services fee is at arm's length. The said document was not available before the AO because it relates ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocument to be produced or the affidavits to be filed. Even if there was a failure to produce the documents before the ITO and the A.A.C, the Tribunal has the jurisdiction in the interests of justice to allow the production of such vital documents." 18. In the present case also, the documents furnished by the assessee are vital which go to the root of the present controversy, so these are to be admitted in the interest of natural justice but these documents are required to be examined and considered at the level of the AO. We, therefore, set aside the impugned order and remand the present issue back to the file of the AO to be decided afresh in accordance with law after providing due and reasonable opportunity of being heard to the assessee. 19. For the aforesaid view, we are also fortified by the decision of the ITAT Delhi Bench 'F' in the case of UOP LIC v Additional Director of Income-tax, International taxation, Circle 2(2) New Delhi (2007) 108 lTD 186 wherein relevant findings given in paras No, 30, 31 33, 48, 52 read as under: "30. It is a settled position that production of additional evidence at the appellate stage is not a matter of right to litigating public and allowin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter Bombay Vs. Lala Panchan AIR 1965 S.C. 1008 cited by the Ld. Counsel for the assessee, it was observed by the Hon'ble Supreme Court that the power to admit additional evidence does not entitle the appellate court to let in fresh evidence only for the purpose of pronouncing judgment in a particular way and it is only for removing a lacuna in the evidence that the appellate court is empowered to admit additional evidence. In the case of Arjan Singh V. Kartar Singh AIR 1951 S.C. 193, it was held that the discretion given to the appellate court by Order 41, Rule 27 of CPC to receive and admit additional evidence is not an arbitrary one but is a judicial one circumscribed by the limitations specified in that Rule. It was also held that the legitimate occasion for the application of the said Rule is when on examining the evidence as it stands some inherent lacuna or defect becomes apparent. To the similar effect is another decision of Hon'ble Supreme Court in the case of Natha Singh Vs. Financial Commissioner Taxation AlR 1976 S.C. 1053. 31. As per rule 29 of the Appellate Tribunal Rules, 1963, the Tribunal has the power to allow additional evidence not only if it requires such evide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de. 33. It is also well settled that once additional evidence is taken into consideration, it has to be read as part or the record and before drawing any inference on the basis of contents of that document admitted as additional evidence, an opportunity has to be given to the other side to explain or rebut the same. As held by Hon'ble Madras High Court in the case of RSS Shanmugam Pillai & Sons (supra), if the Tribunal finds that the documents filed are quite relevant and for the purpose of deciding the issue before it, it would be well within its powers to admit the evidence, consider the same on merits or remit the matter to the lower authorities for examining the same. in the case of Smt. Urmila Ratilal (supra), Hon'ble Gujarat High Court has held that when the additional evidence field by the revenue was admitted by the Tribunal overruling the objection raised by the assessee, interest of justice demanded that the assessee was given an opportunity to explain or rebut the additional evidence before relying on the same. In the case of Charbhai Biri Works Vs. Asstt CIT (2003) 87 ITO 189, cited by the Ld. Counsel for the assessee, it was held by the Pune Bench of ITAT in it Third ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s case before the Assessing Officer who shall take into consideration the same in accordance with law. Since the other issues raised in this appeal related to the main issue of PE, we deem it appropriate to restore these issues also to the file of the Assessing Officer for fresh decision along with the main issue. In so far as the issue relating to the levy of interest u/s 234B is concerned, the Ld. Counsel for the assessee has contended before us that the same is squarely covered in favour of the assessee by the decision of Delhi Special bench of ITAT in the case of Motorola inc. Vs. Dy. CIT (2005) 95 ITD 269. We, therefore, direct the Assessing Officer to decide the issue relating to levy of interest u/s 234B in the light of the decision of Special Bench in the case of Motorola inc (supra). The impugned order of the Ld. CIT(A) on all the issues involved in the present appeal is accordingly set aside and the matter is restored to the file of the Assessing Officer for fresh decision as per the directions given hereinabove." 20. In view of the above, the impugned order of the ld. CIT(Appeals) is set aside and the issue is remanded back to the file of the AO for fresh adjudication i ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
