9911796707
TMI Blog2015 (9) TMI 1175X X X X Extracts X X X X X X X X Extracts X X X X ..... a return of income on 30/09/2009 declaring a loss of Rs. 16,91,64,634/-,which was subsequently revised on 28/3/2011 declaring an income of Rs. 10,39,27,730/-. The return of income filed by the assessee was subject to scrutiny assessment, whereby total income was determined by the Assessing Officer at Rs. 10,68,89,950/-, which inter-alia, included the disallowance of Rs. 19,66,297/- and Rs. 9,95,919/- representing payment made to M/s. UPS Worldwide Forwarding Inc. USA(in short 'UPS-WWF') towards legal services to Titus and depreciation on assets purchased from UPS WWF respectively. 3. In the appeal of the assessee, the first issue relates to the disallowance of Rs. 19,66,297/- made by the Assessing Officer by invoking section 40(a)(i) of the Act. In this context, brief facts are that the said payments were claimed to be amount reimbursed to its associated enterprise, UPS-WWF with respect to the sums payable to DT Exim Pvt. Ltd. (Titus) for their legal services provided to the assessee. The stand of the Revenue is that the legal services provided by the vendor to the assessee company were for use in the conduct of its business and, therefore, such a payment was in the nature of Fee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rlier assessment year 2008-09, assessee had claimed depreciation on assets imported from its associated enterprise, UPSWWF of a value of Rs. 42,98,028/-, the assets being, Computers, Scanners, Printers; etc. In assessment year 2008-09 Assessing Officer disallowed the claim of depreciation primarily on the ground that assessee did not furnish any evidence in the form of Customs Clearance Certificate, Bill of Entry, etc. The said dispute travelled to the Tribunal and vide its order dated 27/02/2015(supra), the Tribunal has allowed the claim of the assessee. 4.2 In this background, the claim of the Ld. Representative for the assessee was that the depreciation of Rs. 9,95,919/- claimed by the assessee in this year deserves to be allowed since the depreciation on the same assets in the earlier assessment year stands allowed. The aforesaid factual matrix is not assailed by the Ld. Departmental Representative and the same is also borne out of the order of the Tribunal dated 27/02/2015(supra). As a consequence, we uphold the plea of the assessee and direct the Assessing Officer to allow the depreciation of Rs. 9,95,919/- claimed by the assessee and accordingly assessee succeeds on this gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxable in India for the reason that they are in the nature of mere reimbursement of actual cost without any element of profit and even otherwise, the services rendered by RMS, USA did not fall within the scope of 'Fees for Included Services' as per Article 12(4) of the Indo-USA Tax Treaty 5.3 The Assessing Officer disagreed with the assessee in the draft assessment order and assessee carried its objection before the Dispute Resolution Panel(DRP). As per DRP, RMS-USA was a non-resident and would thus, be entitled to the benefits available under the Indo-USA Tax Treaty. As per the DRP, the Debtor Management Services do not come within the purview of 'Fee for Included Services' in terms of Article-12(4) of the Indo-USA Tax Treaty and instead the same would be taxable as business profits and in the absence of the RMS-USA having any Permanent Establishment in India, no part of its income earned from services rendered overseas would be taxable in India. For the aforesaid reasons, the DRP upheld the stand of the assessee that there was no liability on the assessee company to withhold taxes on the payment made to the RMS-USA, even if, it was routed through its associated enterprise UPSWW ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of the assessee company and that of its comparable concerns. The said subvention amount was negotiated during the financial year 2010-11 and in that period assessee recorded the same as Prior Period income. However, since the said amount of income related to the assessment year under consideration i.e. assessment year 2009-10, in its return of income filed for the said assessment year, assessee offered the said income and included the same while computing its 'net profit margin' for the purposes of carrying out its comparability analysis with other comparable concerns for determining its arm's length price. In other words, the 'subvention income' received by the assessee was considered as a part of its operating income. The Transfer Pricing Officer differed with the assessee on the treatment of subvention income as a part of the operating income. The Transfer Pricing Officer excluded such subvention income from the operating profit margin of the assessee and accordingly, worked out an adjustment of Rs. 34,40,04,846/- while determining the arm's length price of the international transaction. Before the DRP, assessee objected to the exclusion of subvention income from the ..... 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