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TMI Blog2023 (3) TMI 391X X X X Extracts X X X X X X X X Extracts X X X X ..... company, the transaction between such Indian subsidiary and another Indian company would fall within the ambit of international transaction as defined u/s. 92B of the Act. Thus, we do not agree with the findings of authorities below that the transaction of slump sale between the assessee and MWH ResourceNet (India) Pvt. Ltd. is an international transaction. Valuation of assets u/s 50B - HELD THAT:- Another facet of slump sale transaction is that the assessee has not furnished Form 3CEA along with the return of income. The assessee purportedly filed form 3CEA on 23/03/2013 before AO during draft assessment proceedings. However, the draft assessment order was already passed on 22/03/2013 i.e. a day prior to the filing of form 3CEA. The assessee pointed this fact during the course of objection raised before the DRP. No finding was given by the DRP on this issue. It is relevant to mention here that filing of Form 3CEA was a mandatory requirement for determining the value of the asset. The assessee has furnished the same at a belated stage. Taking into consideration entirety of facts we deem it appropriate to restore this issue back to the file of AO for the limited purpose of ascertai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of revised computation of income filed during the course of assessment proceedings - assessee pointed that the DRP had directed the Assessing Officer to consider revised computation of income - HELD THAT:- As Assessing Officer has not given effect to the direction DRP. This issue is restored back to the file of Assessing Officer to comply with the direction of DRP to consider revised computation of income. The ground No.12 of the appeal is allowed for statistical purpose. X X X X Extracts X X X X X X X X Extracts X X X X ..... ade by Assessing Officer was Rs.34,75,99,943/- on account of slump sale for which separate grounds (ground No.3 & 4) have been raised. The ld.Counsel for the assessee submitted that ground No.1 & 2 have been raised out of abundant caution as the TPO and DRP has proposed the adjustment although the Assessing Officer in the final assessment order has made no such addition. Hence, the adjustments made by the TPO/DRP cannot be given effect. In support of his contentions the ld.Counsel for the assessee placed reliance on the decision rendered in the case of Sandivik Asia P. Ltd. vs. ACIT reported 27 ITR (Trib)477 (Pune). 3.1 In respect of ground No.3 of appeal, the ld. Counsel for the assessee submitted that the Assessing Officer and the DRP have erred in treating transaction of slump sale entered into by the assessee with MWH Resources Net (India) Pvt. Ltd. as international transaction. The ld.Counsel for the assessee submitted that the asset purchase agreement was entered into between two India resident companies incorporated in India, therefore, the provisions of section 92C would not get attracted. He referred to the asset purchase agreement at page -3 of the paper book. The ld.Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s.56,51,407/-. The ld.Counsel for the assessee submitted that the assessee is eligible to claim deduction u/s 10A in respect of aforesaid incomes/depreciation. 6. The ld.Counsel for the assessee submitted that in ground No.12 of appeal, the assessee has assailed the findings of Assessing Officer in not considering revised computation of total income filed during the course of assessment proceedings. The DRP has given directions to the Assessing Officer to consider the revised computation before passing the final assessment order , however, the Assessing Officer has failed to comply with the directions of the DRP. 7. Per contra, Ms. Vatsalaa Jha representing the Department submitted that in so far as ground No.1 & 2 are concerned on verification of the records it was found that the TPO made adjustment on account of engineering design services Rs.2,44,54,113/- and made adjustment in respect of management fee Rs.74,05,940/-. In draft assessment order the addition was made, however, while passing final assessment order the adjustment in respect of the above two issues remain to be added. It is a mistake apparent on record , therefore, direction may be given to the Assessing Officer t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... action for determining whether the transaction falls within the meaning of international transaction. To support this contention he placed reliance on the decision in the case of CIT vs. Kodak India (India) Pvt. Ltd. in Income Tax appeal No.15 of 2014 decided on 11/07/2016 by the Hon'ble Bombay High Court and the decision of Tribunal in the case of Astrix Laboratories Ltd. vs. DCIT in ITA No.234/Hyd/2014 decided on 25/03/2015. 9. We have heard the submissions made by rival sides and have examined orders of the authorities below. We have also considered the decisions on which reliance has been paced by ld.Counsel for the assessee. FINDINGS: 9.1 The issues raised in ground No.1 & 2 of the appeal are taken up together. (i) Adjustment of Rs.93,75,271/- in respect of fees receivable for engineering and design services; (ii) Adjustment of Rs.75,05,940/- on account of payment of management charges. In respect of aforesaid TP adjustment the Assessing Officer has not made any addition in the impugned final assessment order. Although the TPO proposed the adjustment and the DRP confirmed the same rejecting objections of the assessee. This fact has been admitted by Revenue as well ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer and tax liability in relation to such adjustment has not been determined against the assessee. In this background, the only premise that can be drawn is that the grievances raised in the Grounds of Appeal Nos. 3, 5, 6, 9, & 10 relating to the addition of Rs.60,48,143/- in respect of international transactions of the manufacturing wire segment, as proposed by the TPO in his order dated 28.10.2012, do not arise out of the impugned order of the Assessing Officer passed under Section 143(3) read with Section 144C(13) of the Act dated 30.10.2012. Therefore, the aforesaid Grounds do not require any adjudication for the present. So, however, we may make it clear that if in future the Assessing Officer takes steps to give effect to the said addition and determine tax liability thereof, assessee shall be at liberty to appeal against such addition, if so advised in law. Therefore, with the aforesaid remarks, we dismiss the Grounds of Appeal Nos. 3, 5, 6, 9 & 10 in respect of international transactions of manufacturing wire segment as they do not arise out of impugned order of the Assessing Officer dated 30.10.2012 (supra)." Thus, in the light of the facts of the present ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... X of the Act, it is the transaction between two or more AEs, either or both are non-resident for purchase, sale or lease of tangible or intangible property or for providing services or lending or borrowing of money, etc. One of the pre-requisite for a transaction to fall within the ambit of international transaction is, that I the transaction should be between two or more AEs, out of which at least one should be a non-resident. In the present case, as is evident from asset purchase agreement dated 20/03/2009, the agreement is between two companies/AE i.e. MWH Resource Net India Pvt. Ltd. and MWH India Pvt. Ltd.(Assessee) both the said companies are incorporated under the Companies Act, 1956 having their registered offices in India. Thus, the agreement for purchase of asset, on the basis of slump sale is between two resident companies/AEs. It is an admitted fact that both the aforesaid companies are subsidiaries of Foreign Holding Company i.e. MWH Europe Ltd. A bare reading of section 92B defining 'international transaction' would show that there is no such condition that the transaction between two resident companies, subsidiary of a Foreign Holding Company shall be deemed as inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red to tax . In view of the statement made by ld.Counsel for the assessee we deem it appropriate to restore this issue to the file of Assessing Officer for the limited purpose of verification of the fact whether the amount has been offered to tax by the assessee. If it is so, no addition on this account is warranted. The ground No.7 of the appeal is allowed for statistical purpose in the terms aforesaid. 12. The ground of appeal No.8 to 10 are connected issues, therefore, taken up together for adjudication. The ground No. 8 is with respect to the finding of DRP on rejection of books of account of the appellant stating it to be not reliable. The ld Counsel for the assessee submits that the DRP does not have any power to reject books of accounts. The ground No. 9 of appeal is with respect to denial of deduction u/s 10A of Act on the alleged rejection of books of account . The ground No. 10 is with respect to disallowance of deduction of Rs. 8,35,191/- on other income u/s. 10A of the act. The claim of the assessee is that the same is earned out of business of the eligible undertaking. 13. Briefly stated, the fact shows that the assessee has claimed deduction u/s 10 A of the Act. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order. 15. It is an undisputed fact that the assessee has a unit which is eligible for deduction u/s.10A of the Act. The dispute is that the books of account of the assessee are held to be not reliable. It is not the case of Revenue that no profit is earned by the eligible unit. The DRP erred in directing the Assessing Officer to completely disallow entire deduction u/s. 10A of the Act. The ld Counsel for the assessee asserted that denial of deduction by the DRP amounts to enhancement of income, which is not within the domain of the DRP. The DRP has to adjudicate on the objections raised by the assessee. In the draft assessment order, the Assessing Officer has granted deduction u/s.10A of the Act, which has been withdrawn by the direction of the DRP in the final assessment order. 16. The ld.Departmental Representative supported the directions of the DRP and assessment order. 17. We have carefully considered the rival contentions and perused the orders of the lower authorities as well as the directions of the DRP The fact is that the assessee has a unit which is eligible for deduction u/s.10A of the Act. During the course of assessment proceedings while framing the draft assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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