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DATE: August 30, 2019 (Date of pronouncement)
DATE: September 14, 2019 (Date of publication)
AY: 1997-98
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CITATION:
S. 147/148: It is mandatory for the AO to follow the procedure laid down in GKN Driveshafts 259 ITR 19 (SC) and to pass a separate order to deal with the objections. The disposal of the objections in the assessment order is not sufficient compliance with the procedure. The failure to follow the procedure renders the assumption of jurisdiction by the Assessing Officer ultra vires (Bayer Material Science 382 ITR 333 (Bom) & KSS Petron (Bom) followed)

The moot question is, therefore, the disposal of the objections by the Assessing Officer in his assessment order dated 26th March, 2004 constitutes sufficient compliance with the procedure prescribed by the Hon’ble Supreme Court in the case of GKN Driveshafts (India) Ltd. (supra) or, whether it was necessary for the Assessing Officer to have first disposed of the Appellant’s objections by passing a speaking order and only upon communication of the same to the Appellants, proceeded to reopen the assessment

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DATE: February 28, 2019 (Date of pronouncement)
DATE: February 26, 2019 (Date of publication)
AY: -
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CITATION:
S. 92C Transfer Pricing: The TPO cannot re-characterize a transaction of subscription to redeemable preferential shares as being equivalent to interest free loans advanced by the assessee to the AE & charge notional interest thereon. The TPO cannot disregard the apparent transaction and substitute the same without any material or exceptional circumstances pointing out that the assessee had tried to conceal the real transaction or that the transaction in question was sham. The TPO cannot question the commercial expediency of the assessee entered into such transaction

The facts on record would suggest that the assessee had entered into a transaction of purchase and sale of shares of an AE. Nothing is brought on record by the Revenue to suggest that the transaction was sham. In absence of any material on record, the TPO could not have treated such transaction as a loan and charged interest thereon on notional basis

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DATE: October 25, 2018 (Date of pronouncement)
DATE: December 22, 2018 (Date of publication)
AY: 2007-08
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CITATION:
S. 147 Reopening: If the assessee's son contends in his assessment that certain investments belong to the assessee, that gives "reason to believe" to the AO to reopen the assessment. The subjective satisfaction of the AO has to seen and whether that satisfaction suffers from any perversity (Maniben Valji Shah 283 ITR 354 (Bom) distinguished)

The reopening of assessment u/s 147 on the basis of information in the form of observations of ITAT is on sound footing and which constitutes a tangible material for the purpose of reopening as the assessee did not file her return of income as required u/s 139(1) of the Act explaining the source of investment. Therefore, we are of the considered view that the reopening of assessment is on sound basis and there is no merits in the arguments of the assessee that the AO has reopened the assessment without any tangible material which suggests escapement of income within the meaning of section 147 of the Act

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DATE: June 26, 2018 (Date of pronouncement)
DATE: August 4, 2018 (Date of publication)
AY: 2008-09
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CITATION:
S. 260A Transfer Pricing: Appeals against exclusion or inclusion of comparables to determine ALP of tested parties should not be filed in a ritualistic manner. Any inclusion or exclusion of comparables per se cannot be treated as a question of law unless it is demonstrated to the Court that the Tribunal or any other lower authority took into account irrelevant consideration or excluded relevant factors in the ALP determination that impact significantly

However, before closing, we would like to record the fact that we find that the Revenue is regularly filing appeals from the orders of the Tribunal in respect of Transfer Pricing particularly with regard to exclusion and inclusion of certain companies as comparables to determine ALP of tested parties. These appeals are being filed in a ritualistic manner. This results in the orders of the Tribunal which are essentially findings of fact in respect of exclusion/inclusion of a comparable being challenged without pointing out in any manner perversity of finding or failure to adhere to the settled principles of law while determining comparables such as Rule 10B of the Income Tax Rules, 1961. This unnecessarily takes up the scarce time of the Court.

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DATE: May 4, 2016 (Date of pronouncement)
DATE: May 7, 2016 (Date of publication)
AY: 2008-09
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CITATION:
Transfer pricing of AMP Expenditure: In the case of a manufacturer operating in a competitive industry, high AMP expenditure cannot be assumed to have been incurred for the benefit of the brand owner. The TPO has to prove that the real intention of the assessee in incurring AMP expenses was to benefit the AEs and not to promote its own business. Also, if the assessee has reported high turnover & profits & offered to tax, the basic ingredient required to invoke s. 92 that there is transfer of profit from India remains unproved. In the absence of the AO/ TPO showing that there is a formal/ informal agreement to share the AMP expenditure, the adjustment cannot be made. The matter cannot be remanded to the AO/ TPO for reconsideration

In these circumstances, the fundamental question to be answered is to decide as to whether in absence of any agreement for payment of AMP expenses by the AEs can it be held that there was an international transaction only on the basis that AMP expenditure, incurred by the assessee, would have benefitted the AEs, who owned the brands used by the assessee. In our opinion, the arguments suffers from the very basic flaw that it presumes that the assessees would incur AMP not to promote its own business. In other words, the TPO has failed to prove that the real intention of the assessee in incurring advertisement and marketing expenses were to benefit the AEs and not to promote its own business. The turnover of the assessee proves that during the year under consideration the assessee had done a reasonably good business, as stated earlier. The resultant profit was offered for taxation in India. Therefore, transferring of profit from India, the basic ingredient to invoke the provisions of section 92 of the Act, remains unproved

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