This Digest of case laws is prepared by KSA Legal and AIFTP from judgements reported in BCAJ, CTR, DTR, ITD, ITR, ITR (Trib), Chamber's Journal, SOT, Taxman, TTJ, BCAJ, ACAJ, www.itatonline.org and other journals
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S. 115JB : Book profit-Net worth turned positive-Discharged by he Sick Industrial Companies (Special Provisions) Act, 1985-Liable to be assessed on book profit-Matter remanded to pass speaking order-COVID 19 pandemic lockdown period would be excluded in computing 90 days total time limit for pronouncing appellate order. [S.255, SICAS S. 17]
Windsor Machines Ltd. v. DCIT (2020) 81 ITR 41 / 185 ITD 576 /206 TTJ 148/ (2021) 199 DTR 79 (Mum.)(Trib.)
S. 115JB : Book profit-Net worth turned positive-Discharged by he Sick Industrial Companies (Special Provisions) Act, 1985-Liable to be assessed on book profit-Matter remanded to pass speaking order-COVID 19 pandemic lockdown period would be excluded in computing 90 days total time limit for pronouncing appellate order. [S. 255, SICAS S. 17]
Windsor Machines Ltd. v. DCIT (2020) 81 ITR 41 / 185 ITD 576 /206 TTJ 148 /(2021) 199 DTR 79 (Mum.)(Trib.)
S. 92C : Transfer pricing-Arm’s length price-Working capital-Captive service provider-No negative working capital adjustment could be made.
Tivo Tech (P.) Ltd. v. DCIT (2020) 185 ITD 209 (Bang.)(Trib.)
S. 92C : Transfer pricing-Arm’s length price-Royalty-Bench mark analysis-Matter remanded.
Mahindra Heavy Engines Ltd. v. ACIT (2020) 185 ITD 291 (Mum.) (Trib.)
S. 92C : Transfer pricing-Arm’s length price-Comparable-Shown margin of 9.02 per cent as against average margin of final comparables adopted by TPO at 22.69 per cent-High Turnover having brand value to be excluded-Matter remanded to TPO for denovo consideration-Provisions for bad debts as non-operating expenditure only in case of three comparable companies-Foreign exchange loss being not an extra-ordinary item in relevant year to assessee alone and similar loss being incurred by comparable companies, it was not a distinguishing factor to be considered for arriving at ALP.
United Online Software Development (India) (P.) Ltd. v. DCIT (2020) 185 ITD 15 (Hyd.)(Trib.)
S. 92C : Transfer pricing-Arm’s length price-Allowability of expenditure-TPO has no authority to disallow the expenditure-ALP adjustment cannot be equated with disallowance of expenses. [S. 37(1)]
Hamon Cooling Systems (P.) Ltd. v. DCIT (2020) 185 ITD 23/196 DTR 97 / 208 TTJ 725 (Mum.)(Trib.)
S. 92C : Transfer pricing-Arm’s length price-Comparable-Companies whose turnover was less than or more than 10 times turnover of assessee could not be considered as comparable companies-Loss making companies in three financial years were to be excluded from list of comparables-Export filter turnover-Substantial expenditure on R &D-Matter remanded-As per retrospective amendment to section 92B w.e.f. 1-4-2002 deferred payment on receivables or any other debt arising during course of business was an international transaction. [S. 92B]
KBACE Technologies (P.) Ltd. v. Dy. CIT (2020) 185 ITD 164 (Bang.)(Trib.)
S. 92C : Transfer pricing-Arm’s length price-Comparable-Turnover of more than 200 crores upto 500 crores-Working capital adjustment-Negative working capital adjustment shall not be made in case of a captive service provider as there is no risk and it is compensated on a total cost plus basis.
Tavant Technologies India (P.) Ltd. v. DCIT (2020) 185 ITD 309 (Bang.)(Trib.)
S. 92C : Transfer pricing-Arm’s length price-Software development service-Comparable-Functionally different-Company, engaged in both development of software products as well as services whose segmental data was also not available could not be accepted as valid comparable-Filter-Related party-Providing multiple services like custom software development in addition to cloud computing, application services and mobile technology-providing software development and IT enabled services like hardware designing-Employee cost-Huge revenue from engineering design charges-broadband services and wireless internet-based communication services-Providing cloud consulting, cloud regulations and cloud application development-Software validation and verification services to banking and financial services industry worldwide-Held to be not comparable-Positive net worth-software development and testing services-Valid comparable.
Atlas Healthcare Software India (P.) Ltd. v. Dy. CIT (2020) 185 ITD 372 (Kol.)(Trib.)
S. 92C : Transfer pricing-Arm’s length price-Reimbursement of expenses-Adjustment cannot be made-Comparable-Functional similarity-Providing a platform for sale of electronic products of multiple brands-Cannot be held to be comaparble-Manufacture and trading of consumer electronics, home appliances-Different financial year-Matter remanded. [S. 92B]
Samsung India Electronics (P.) Ltd. v. DCIT (2020) 185 ITD 387 (Delhi)(Trib.)