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TMI Blog2013 (8) TMI 1137X X X X Extracts X X X X X X X X Extracts X X X X ..... e are that the assessee paid consultancy charges to Mr. Yu Ching Lee in China for the services rendered in China with regard to export of their materials to Chinese customers. The Assessing Officer held that the expenditure pertains to the joint venture company and not to the assessee and therefore, disallowed the claim. 6. Before the ld. CIT(A) the assessee submitted that the consultant was not a joint venture partner as wrongly presumed by the Assessing Officer. The services were rendered by the overseas consultant in respect of bulk pharma products and process. The expertise of the overseas consultant had been utilized in order to protect the business interest of the assessee and to maintain the quality of its products and processes. 7. The assessee further submitted that in assessee s own case for assessment years 2003-04 and 2004-05 the issue was decided in favour of the assessee by the ld. CIT(A) and no second appeal thereagainst was preferred by the Department. 8. The ld. CIT(A) observed that the consultancy agreement which was already placed before the Assessing Officer during the course of assessment proceedings and the invoices for payment were produced for verif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not to the assessee. 12. On appeal, the ld. CIT(A) allowed the claim of the assessee after examining the agreement dated 25.1.2005 with Mr. Yu Ching Lee, of China, a copy of which has also been placed before us at pages 2 to 3 of the paper book. The ld. CIT(A), after examining the agreement, held that the agreement was not with the joint venture company but was with the assessee-company and that the amount paid represented the genuine business expenditure of the assessee and the same was paid in relation to consultancy services rendered in relation to the export business of the assessee. No material was brought on record by the Revenue to show that consultancy charges paid in question does not relate to the aforesaid export business of the assessee. Further, the assessee also filed before the Assessing Officer and the ld. CIT(A) copy of invoice for payment of consultancy charges, a copy of which has been placed before us at page 4 of the paper book, in support of the contention that the amount paid was towards business expenditure of the assessee. It is not in dispute that the assessee was engaged in the business of exporting of bulk pharma products and process during the year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee s contention that deduction u/s 10B should be determined independently for each undertaking before setting off of losses of non-EOU units, the assessee relied on the decision of the Chennai Bench of the Tribunal in the case of Ford Business Services. The assessee further submitted that subsequent to survey by the Department, it was seen that the method of costing of inter unit transfer of materials was wrong and therefore, the cost of transfer of materials from the non-EOU unit to the EOU unit was wrongly recorded at higher values resulting in higher loss in the non-EOU unit and corresponding profit in the EOU units. It was submitted that the assessee was allowed deduction u/s 10B in respect of its profit from EOUs. It was not the first year in which the assessee has claimed deduction. The Assessing Officer has not made out a case for denial of deduction u/s 10B since it is accepted that the assessee was having EOUs from which it has made exports eligible for deduction u/s 10B. The assessee had justified the higher expenses in its nonEOU units as being due to high Research and Development costs. It was also submitted that in the case of Scientific Atlanta India Technology P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upra). Therefore, this ground of appeal of the Revenue is dismissed. 18. Ground No.4 of the appeal of the Revenue is directed against the order of the ld. CIT(A) in deleting the addition of ₹ 39,18,508/- towards adjustment of interest income earned by the assessee from its Associated Enterprise (AE) on funds advanced to its AE. 19. The brief facts of the case are that in view of the substantial international transactions of the assessee, a reference had been made to the Transfer Pricing Officer(TPO). The TPO recommended certain adjustments in respect of interest charged by the assessee from tis AE on the funds advanced by the assessee to its AE. The assessee had charged interest at LIBOR plus 1% on the advances made by it to its AE. The TPO while determining the Arm s Length Price (ALP) of the transaction had made adjustment by applying the PLR on the monies advanced. 20. Before the ld. CIT(A) the assessee submitted that interest in an international financial transaction could expenditure charged on par with the market rates prevalent among foreign banks, foreign institutions and business enterprises while dealing with Indian entities. For such transactions, the rate ..... X X X X Extracts X X X X X X X X Extracts X X X X
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