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TMI Blog2013 (10) TMI 527X X X X Extracts X X X X X X X X Extracts X X X X ..... uments was provided by the Ld. DR. The issues decided by the Hon'ble ITAT inter-alia included disallowance of payment of royalty made by the assessee to its Associate Enterprise amounting to Rs.74,63,975/-. The addition made by the AO and confirmed by Ld CIT(A) was deleted by the Hon. Tribunal. The discussion on the issue is made in para 10-17 of the ITAT's order while the findings are contained in para -16-17. From perusal of para-17 of the order, it becomes clear that the Hon'ble Tribunal has delivered the judgment in context of section 92 of the I.T. Act as it existed prior to amendment made by the Finance. Act,2001 w.e.f 01-04-2002. The same is fortified by the observation of the Hon'ble Tribunal where it is held that-- ".....it is nec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e mum-national group. The profits derived by such enterprises carrying on business in India can be controlled by the multi-national group, by manipulating the prices charged and paid in such intra- group transactions, thereby, leading to erosion of tax revenues. 55.2 Under the existing section 92 of the Income-tax Act, which was the only section dealing specifically with cross border transactions, an adjustment could be made to the profits of a resident arising from a business carried on between the resident and a non-resident, if' it appeared to the Assessing Officer that owing to the close connection between them, the course of business was so arranged so as to produce less than expected profits to the resident. Rule I1 prescribed under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r from perusal of the judgment, it becomes absolutely clear that the Hon'ble Tribunal has incorrectly relied on the pre-amended provision of law to decide the issue of royalty payment, even though the relevant portions of circular discussed above were available in department paper book and this fact was mentioned in the order itself. 4. The Hon'ble Tribunal has also misunderstood the connection raised by the Ld D.R. wherein it was submitted that the royalty payment cannot be bench marked by clubbing the same with other transactions of the assessee. The case laws in support of the same, cited by the revenue was misunderstood by the Hon'ble Tribunal to be a contention being against the payment of royalty on aggregate amount. Such a contentio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transaction. The question relate to scrutiny of international transaction to determine whether or not the same it as amt's length. The principle of transfer pricing aims at determining the pricing in the situations of cross border international transaction, where two enterprises which are subject to the same centre or direction or control (associated enterprise) maintain commercially or financially relation with other. In such a situation, the possibility exist that by way of intervention from the centre or otherwise, business conditions mast be accepted by the acting units which dyers Ji*otn those which in the same circumstances would have agreed upon between unrelated parties. The aim is to examine whether there is anomaly in the transact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... These very sections were substituted for section 92 by the Finance Act, 2001 w.e.f. 1.4.2002 and the explanatory memoranda for the same is available in para-55 of the circular no.14 of 2001. The learned DR argued that the ITAT in its order dated 10.2.2012 has incorrectly relied on the pre-amended provision of law to decide the issue of royalty payment, even though, the relevant portion of the circular discussed above, is available in the department's paper book. Therefore, the learned DR prayed that there is a mistake apparent from the record. 3. The ld.counsel for the assessee argued and relied on para- 16 and 17 of the ITAT order to point out that the order has been passed on merit, and there is no mention of any wrong law which has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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