Forum
Read and express views
× Latest Case Laws on Income Tax by various Income Tax Appellate Tribunals in India

These are the latest case laws decided by various Income Tax Appellate Tribunals (ITAT) of India on Income Tax which have been published recently. The case laws are open for discussion and we invite expert comments from our members on its applicability and effect on relevant issues.

04-04-2019, Kadimi Tool Manufacturing, Section 10B, 154, Tribunal Delhi

  • amit
  • amit's Avatar Topic Author
  • Offline
  • Administrator
  • Administrator
More
1 week 2 days ago #9101 by amit
Section - 10B, 154, 92B, 92CA(3)
Order Date - 04-04-2019
Favouring - Assessee
Court - Tribunal Delhi
Appellant - Kadimi Tool Manufacturing Co. Pvt. Ltd.
Respondent - DCIT
Justice - AMIT SHUKLA JM & O.P. KANT AM
Citation - 419Taxpundit136
Appeal No. - ITA No.5802/Del/2015
Asstt. Year - 2011-12

Order

PER : O.P. KANT, A.M.

This appeal by the assessee is directed against the final assessment order dated 26.08.2015 passed by the learned Deputy Commissioner of Income-tax, Circle -14(1), New Delhi, (in short ‘the learned Assessing Officer’) for assessment year 2011- 12, pursuant to the directions dated 01.07.2015 of learned Dispute Resolution Panel (DRP). The grounds raised by the assessee are reproduced as under:

1. That the learned DRP and consequently the A.O. have grossly erred in law and on facts and in circumstances of the appellant’s case in making adjustment u/s 92CA(3) of the Income-tax Act amounting to Rs. 10,63,122/- on account of alleged delay in recovering the outstanding trade receivables from the AE.

2. That the order of assessment is bad in law and on facts of the appellant’s case.

3. That the learned DRP and consequently the AO have erred in law and on facts and in the circumstances of the appellant’s case in disregarding the internal CUP furnished by the assessee between the transactions with the AE and with non-AE for the credit period extended.

4. That the learned DRP and consequently the AO have erred in holding that the benchmarking of the income to be earned on the delayed trade receivables should be based on the interest rate charged by the Indian banks for domestic loans extended in India.

5. That without prejudice and subject to Ground 6 below, the learned AO has erred in law in not giving the benefit of base rate of SBI as on 30 June of the relevant financial year with regard to safe harbour rules.

6. That without prejudice, the learned DRP and consequently the AO have grossly erred in not applying the LIBOR rate as applicable to the international transactions of loans in the foreign currency to the trade receivables of the assessee.

7. That the lea ned DRP and consequently the AO have grossly erred in law in re-characterizing trade receivables against sales made as independent transaction from the transaction of sales made to the AE and requiring separate benchmarking.

7.1 That the Hon’ble DRP grossly erred in law in not appreciating that the transaction of sales & receivables were required to be aggregated for the purpose of TP analysis.

7.2 That the margins derived by the tested party were way beyond the comparables and thus failed to apply the view taken by Delhi HC in case of Sony Ericsson Mobile Communications in its correct perspective.

8. That the learned DRP and consequently the AO have erred in law in denying the benefit of Sec 1 OB of the Act being 100% Export Oriented Unit.

9. That the learned DRP and consequently the AO have erred in law in alleging that the approval granted by Joint Development Commissioner has not been subsequently ratified by the Board Of Approvals.

10. That the Hon’ble DRP and Ld. AO failed to appreciate that the ratification is internal process of the Board of Approval and assessee is not a party to the same.

11. That the benefit of Sec 1 OB has been denied on the assumption of the fact that the assessee is supposed to have formal ratification approval from the Board of Approvals.

11.1 That the directions by DRP on the claim u/s 10B for the years not before DRP are extraneous, illegal and are prayed to be expunged.

11.2 That the order passed by DRP denying the deduction u/s 10B are based on conjectures, surmises, imaginations and reasons which are beyond the control of the assessee and are prayed to be nullified.

12. That each ground in independent of and without prejudice to the other grounds raised herein.

2. Briefly stated facts of the case are that the assesseecompany was engaged in the business of manufacturing of Thread Rolling Dies, Milled Flat Dies and Milled Ground Dies and sale of Screws etc. For the year under consideration, the assessee filed return of income, declaring income of Rs.1,14,72,196/- on 25.09.2011. The case was selected for scrutiny and notice under Section 143(2) of the Income-tax Act, 1961 (for short ‘the Act’) was issued and complied with. In view of the international transaction carried out by the assessee with its Associated Enterprises (AEs), the Assessing Officer referred the matter of determination of Arm’s Length Price (ALP) of those international transactions to the learned Transfer Pricing Officer (TPO). The learned TPO proposed an adjustment of Rs.9,38,224/- on account of international transaction of interest on overdue receivables.

2.1 The learned Assessing Officer issued a draft assessment order on 26.08.2015, in which, along with addition of the transfer pricing adjustment proposed by the Ld. TPO, he also proposed disallowance of deduction under Section 10B of the Act amounting to Rs.10,63,73,255/-. Against the draft assessment order, the assessee filed petition before the learned DRP. The learned DRP increased the transfer pricing adjustment to Rs.10,63,122/-, however, subsequently rectified to to Rs.7,22,120/- vide order passed under Section 154 of the Act, dated 20.10.2015. On the issue of disallowance under Section 10B of the Act, two members of the learned DRP upheld the disallowance, although on the grounds not relied upon by the learned Assessing Officer.

2.2 Aggrieved with the disallowances sustained by the learned DRP and incorporated by the Assessing Officer in the final assessment order dated 26.08.2015 read with TPO's order dated 20.10.2015, the assessee is in appeal raising the grounds as reproduced above

3. In the grounds raised, ground nos. 1 to 7.2 of the appeal are related to the issue of interest on overdue receivables of Rs.7,22,122/-. The facts qua the issue in dispute are that, the assessee reported international transactions of sale of finished goods, amounting to Rs.29.28 crores to its AEs and for which it applied TNMM as the most appropriate method. The assessee earned margin under the TNMM method @48.06% based on Operating Profit/Operating Cost (OP/OC), whereas the comparables had earned decrease margin of 5.62%. All the reported international transactions were accepted at the ALP and no adjustment was made by the Ld. TPO. However, the Ld. TPO

Click to view and download Full Free Judgement of Kadimi Tool Manufacturing Co. Pvt. Ltd. vs. DCIT

Unable to display Google Map.




Please Log in or Create an account to join the conversation.

Time to create page: 0.124 seconds

If You Appreciate What We Do Here On TaxPundit, You Should Consider:

We are thankful for your never ending support.

Latest Analysis - High Courts

PCIT vs. OM PRAKASH JAKHOTIA & ANR.

PCIT vs. OM PRAKASH JAKHOTIA & ANR.

PCIT vs. OM PRAKASH JAKHOTIA & ANR. Read More
Kingfisher Capital CLO Ltd. vs. CIT

Kingfisher Capital CLO Ltd. vs. CIT

Kingfisher Capital CLO Ltd. vs. CIT Read More
Plymex Timber Pvt. Ltd. & Anr vs ITO

Plymex Timber Pvt. Ltd. & Anr vs ITO

Plymex Timber Pvt. Ltd. & Anr vs ITO Read More
NATIONAL PROJECTS CONSTRUCTION CORPORATION LIMITED (NPCC) vs. DCIT

NATIONAL PROJECTS CONSTRUCTION CORPORATION LIMITED (NPCC) vs. DCIT

NATIONAL PROJECTS CONSTRUCTION CORPORATION LIMITED (NPCC) vs. DCIT Read More
  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34

Forum Features

Latest Case Laws
Latest Case Laws are instantly updated in the Forum into their respective section
Latest from CBDT
Latest Circulars, Notifications, Orders etc. from CBDT is updated in the Forum
Ask Experts
You can ask questions to the community
Support
Support queries are either replied via mail or in the Forum so that others can be benefited
Press Releases
Latest Press Notes and Press Releases are updated in the Forum
Connect with Members
You can connect with our community members by replying to their queries

Recommended Articles

 

SITE INFORMATION

All content herein is the copyright of Taxpundit. No images, text, or any other content may be, reproduced or redistributed without the express written consent of Taxpundit.

All Rights Reserved. All Content Copyright.

Newsletter

Subscribe to our newsletter and stay updated on the latest developments and special offers!

Create your own website as per ICAI guidelines. Plan starts at Rs. 15000/- with Free Premium Membership. Read more
Toggle Bar