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TMI Blog2020 (7) TMI 822X X X X Extracts X X X X X X X X Extracts X X X X ..... in various decisions by the Tribunal the application of benefit test analysis has been rejected. Thus, we deem it appropriate to restore the issue back to the file of TPO for fresh adjudication and for determination of ALP of intra-group services by applying most appropriate method specified in section 92C of the Act. Ground No.1 of the appeal is thus, allowed for statistical purposes. Adjustment in respect of reimbursement of expenses - Since we have restored ground No.1 to the TPO, we deem it appropriate to restore ground No.2 of the appeal as well, to the TPO for de-novo adjudication after affording reasonable opportunity of hearing to the assessee. Adjustment made in respect of loans extended by the assessee to domestic group companies, held as deemed International Transaction - HELD THAT:- A bare perusal of the meaning of international transaction defined in section 92B (1) would show that a transaction would fall within the ambit of international transaction if, either or both the associated enterprises are nonresident. In the present case none of the AEs i.e. neither the assessee nor the domestic group companies with which the assessee had entered into transaction are non-r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses (AEs). The international transactions entered into by the assessee during financial year 2011-12 are as under:- S.No. Nature of International Transaction Amount (Rs.) 1. Payment of licence fees 17,63,132 2. Usage fees 13,76,708 3. Reimbursement of expenses 13,58,922 4. Buy back of equity shares 1,50,81,250 5. Regional Headquarter charges 43,20,433 6. Media / Advertisement cost 31,217 7. Brokerage/ commission 84,700 The Transfer Pricing Officer (TPO) in proceedings under section 92CA of the Act made adjustment to the tune of Rs.2,64,83,673/- qua International Transactions. The adjustment made by TPO inter-alia includes, adjustment in respect of intra-group services and the transactions entered into by the assessee with its domestic AEs, which were held as deemed international transaction. Based on the adjustments proposed by the Transfer Pricing Officer (TPO) vide order dated 27/01/2016, the Assessing Officer passed draft assessment order dated 26/02/2016. The assessee filed objections before the Dispute Resolution Panel (DRP) assailing the adjustments made. The DRP vide directions dated 29/11/2016 dismissed the objections of the assesse in toto. In line ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut any basis and on wrong interpretation of the legal provisions. The ld. Authorized Representative of the assessee contended that even if substantial shareholding in domestic companies are held by a foreign entity, the transaction cannot be termed as deemed International Transaction. In support of his contention the ld.Authorized Representative of the assessee placed reliance on the following decisions:- i. CIT vs. Kodak India P. Ltd., 288 CTR 46 (Bom) ii. Research Data Services India Pvt. Ltd. vs. ITO, in ITA No. 1842/Mum/2017, for A.Y 2012-13 decided on 16/10/2019. 4. Per contra, Shri Uodal Raj Singh, representing the Department vehemently defended the assessment order and the directions of the DRP. The ld. Departmental Representative submitted that the assessee has failed to substantiate the services received and the benefit derived by the assessee from such services. 5. We have heard the submissions made by rival sides and have perused the orders of authorities below. We have also considered the decisions, on which the ld. Authorized Representative of the assessee has placed reliance. 6. The first issue in appeal is in respect of adjustment made on account of intra-gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ational Transaction' has been defined in section 92B of the Act. The provisions of the section as they were applicable in AY 2012-13 are reproduced herein below:- Section 92B "(1) For the purposes of this section and sections 92, 92C, 92D and 92E, "international transaction" means a transaction between two or more associated enterprises, either or both of whom are non-residents, in the nature of purchase, sale or lease of tangible or intangible property, or provision of services, or lending or borrowing money, or any other transaction having a bearing on the profits, income, losses or assets of such enterprises, and shall include a mutual agreement or arrangement between two or more associated enterprises for the allocation or apportionment of, or any contribution to, any cost or expense incurred or to be incurred in connection with a benefit, service or facility provided or to be provided to any one or more of such enterprises. (2) A transaction entered into by an enterprise with a person other than an associated enterprise shall, for the purposes of sub-section (1), be deemed to be a transaction entered into between two associated enterprises, if there exists a prior agre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assesse and AEs, 'in substance' the transaction between the assesse and the domestic group entities would fall within the ambit of "deemed international transaction". Deeming provisions cannot be invoked by expanding the latitude of expressions used in the section. The authorities below have failed to take into consideration the fact that all group entities are companies incorporated in India having separate legal existence. Except for common shareholding, no material has been relied on by the TPO/DRP to substantiate that the transaction between the entities was influenced by the overseas holding company. 10. In the case of CIT vs. Kodak India (P) Ltd. (supra), the assesse had sold its imaging business to M/s. Carestream Health India Ltd. during the period relevant to AY 2007-08. The transaction was between two domestic non Associated Enterprises. The TPO held that the transaction is International Transaction within the meaning of section 92B (2) as the overseas holding company of the assesee and Carestream Health India Ltd. had entered into global agreement for sale of business prior to sale of imaging business by the assesse to Carestream Health India Ltd. The Tribunal observ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring which the lockdown was in force. We must factor ground realities in mind while interpreting the time limit for the pronouncement of the order. Law is not brooding omnipotence in the sky. It is a pragmatic tool of the social order. The tenets of law being enacted on the basis of pragmatism, and that is how the law is required to interpreted. The interpretation so assigned by us is not only inconsonance with the letter and spirit of rule 34(5) but is also a pragmatic approach at a time when a disaster, notified under the Disaster Management Act 2005, is causing unprecedented disruption in the functioning of our justice delivery system. Undoubtedly, in the case of Otters Club Vs DIT [(2017) 392 ITR 244 (Bom)], Hon'ble Bombay High Court did not approve an order being passed by the Tribunal beyond a period of 90 days, but then in the present situation Hon'ble Bombay High Court itself has, vide judgment dated 15th April 2020, held that directed "while calculating the time for disposal of matters made timebound by this Court, the period for which the order dated 26th March 2020 continues to operate shall be added and time shall stand extended accordingly". The extraordinary steps tak ..... X X X X Extracts X X X X X X X X Extracts X X X X
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