9911796707
TMI Blog2021 (2) TMI 145X X X X Extracts X X X X X X X X Extracts X X X X ..... ins to the Assessment year 2010-11. The appeal was admitted by a bench of this Court vide order dated 09.11.2018 on the following substantial questions of law: "(1) Whether on the facts and in the circumstances of the case, the Tribunal is right in law in setting aside disallowance of depreciation claimed on Software Expenses under Section 40(a)(ia) of the Act by following its earlier order in case of Kawasaki Micro Electronics in IT(TP)A No.1512/Bang/2010 dated 26.06.2015 even when assessing authority rightly held that payment for purchase of software was in the nature of 'royalty' in terms of Explanation 2 to Section 9 (1)(vi) of the Act? (2) Whether on the facts and in the circumstances of the case, the Tribunal is right in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e development services sector. The Assessing Officer, in the draft assessment order dated 10.03.2014, made an addition of a sum of Rs. 8,50,32,504/- to the income disclosed by the assessee and also made disallowances under Section 40(a)(i)(a) of the Act. Thus, the Assessing Officer made a total addition of Rs. 8,72,47,691/- and total income of the assessee was determined at Rs. 21,51,59,762/-. 3. The assessee filed objections before the Dispute Resolution Panel, which vide direction dated 23.12.2014 reduced the transfer price adjustment made by the Transfer Pricing Officer by granting an adjustment towards depreciation as prayed by the assessee and the disallowance made under Section 40(a)(i)(a) of the Act was confirmed whereas disa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... second substantial question of law it is argued that assessee has not determined the expenditure incurred in relation to exempt income and Assessing Authority has rightly held that even though there is no dividend income from the investment, the assessee was required to determine expenditure as per Section 14A read with Rule 8D of the Rules. In support of aforesaid submission, reliance has been placed on the decision of this Court in 'THE COMMISSIONER OF INCOME-TAX Vs. M/s. KINGFISHER FINVEST INDIA LTD.' IN ITA NO.100/2015 DECIDED ON 29.09.2020. 5. On the other hand, learned counsel for the assessee submitted that Rule 10B of the Rules provides for the method in which comparability analysis is to be conducted under the transaction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i High Court in 'CHEMINVEST LTD. Vs. CIT' (2015) 61 TAXMANN.COM 118 (DELHI) AND 'CIT Vs. HLCIM INDIA (P) LTD.' (2015) 57 TAXMANN.COM 28 (DELHI). 6. We have considered the submissions made on both sides and have perused the record. Admittedly, the first substantial question of law does not arise for consideration. Therefore, we need not deal with the same. Sofar as second substantial question of law is concerned, this Court in ITA No.416/2014 decided on 12.01.2021, has held that if no exempt income has accrued to the assessee the provisions of Section 14A do not apply. However, reliance placed by the learned counsel for the revenue on the decision in the case of KINGFISHER FINVEST LTD., supra, is concerned, suffice it to sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lause (ii) of Rule 10B(1)(e), the net profit margin is realized by an unrelated enterprise / comparable company is computed having regard to the same relevant base as was selected in sub-clause (i). Sub-clause (iii) of said Rule specifies that before a comparison of net margins realized under sub-clauses (1) and (ii) is done, the net margin realized under sub-clause (ii) must be adjusted to take into account the differences which could materially affect the net profit margin in the open market. So also, in terms of Rule 10B(3), an uncontrolled transaction shall be considered comparable if none of the differences between the comparable companies and the controlled transaction are likely to materially affect the profit arising from such trans ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
