Bidhi Chand Singhal vs. ITO (ITAT Delhi)- In our opinion, in the absence of definition of “eco-tourism” the hotel as added into the Item No.15 of Part C is to be construed to be hotel situated in the State of Himachal Pradesh or the State of Uttaranchal having a valid licence on the basis of No Objection from Pollution Department which can be treated to be a hotel eligible for deduction u/s 80IC as per provisions of Section 80IC. Therefore, we allow the claim of deduction u/s 80-IC to the assessee and the appeal of the assessee is allowed.
The Delhi bench of the Income-tax Appellate Tribunal [“The Tribunal”] recently pronounced its ruling in the case of Clear Plus India Private Limited v. DCIT [ITA NO. 3944/DEL/2010], wherein it upheld the transfer pricing methodology adopted by the taxpayer to benchmark its export sale by the application of internal comparable uncontrolled price [“CUP”] method, adopting its associated enterprise [“AE”] as the tested party. The revenue’s contention to use Transactional Net Margin Method [“TNMM”] was rejected as in view of the Tribunal minor aberrations in the application of CUP method do not warrant its abandonment.
Income Tax Appellate Tribunal (“The Tribunal”), Delhi Bench recently pronounced its ruling in the case of ACIT v. M/s NIT Limited (Appeal no. -2011-TII-1 6-I TA T-DEL-TP or ITA No.1844 & 1871/Del./2009) on various transfer pricing issues. The most important issue dealt by the Tribunal was in respect of details submitted before the Tribunal that were not available in the public domain at the time of assessment and first appellate proceedings. The Tribunal held that since these documents were essential for determining arm’s length price of the relevant international transactions, the same need to be admitted for consideration.
Marubeni India Pvt. Ltd. v ACIT (I.T.A. No.919/Del/2009) (ITAT Delhi)- Interest income is to be excluded from operating revenue for computing the net profit from operating activity unless such interest income has nexus with the international transaction. Under the captive service and cost plus model, if an expense has a direct link with the international transaction, the same should form part of total cost i.e. operating costs. The onus is on the taxpayer to maintain robust documentation for availing necessary economic and risk adjustments. The option of +/- 5 % is available only to the taxpayer when he is computing the ALP and not when the AO/TPO is computing the ALP
Delhi bench of the Income-tax Appellate Tribunal (the Tribunal) in the case of Intelsat Corporation (ITA No. 5443/D/2010) (Judgment Date: 4 March 2011, Assessment Year: 2007-08) held that income received by the non-resident taxpayer from leasing of transponder capacity and bandwidth cannot be taxed as ‘royalty’ under the provisions of Income-tax Act, 1961 (the Act).
Non-referred international transactions fall outside the TPO’s jurisdiction . The Delhi Bench of the Income-tax Appellate Tribunal (the Tribunal) in the case of M/s. Amadeus India Pvt Ltd v. ACIT, Range-I, New Delhi (ITA No. 5203/Del/2010) held that the role of Transfer Pricing Officer (TPO) is limited to the determination of arm’s length price in relation to the international transaction(s) referred to him by the Assessing Officer (AO). The TPO, suo motto, cannot take cognizance of any other international transaction not referred to him by the TPO.
Income Tax Appellate Tribunal (“The Tribunal”), Delhi Bench recently pronounced its ruling in the case of M/s Aricent Technologies (Holding) Limited v. DCIT (Appeal no. ITA No. 4699 /Del. /2010) for AY 2006-07, on the amount paid as incentive to employees of the Taxpayer by its parent company pursuant to transaction of takeover for the employees’ retention. The Tribunal held in favor of the Taxpayer observing that transaction does not have any element of income for the purpose of making an adjustment to the price of the said international transaction and is merely in the nature of reimbursement of incentive paid by Taxpayer to its employees.
The Delhi bench of the Income Tax Appellate Tribunal (Tribunal) recently pronounced its ruling in the case of Birlasoft (India) Ltd. v. Dy. CIT ITA NO. 3839/DEL/2010, where the Taxpayer had determined the arm’s length price of their international transactions on the basis of internal benchmarking analysis. The Tribunal upheld the transfer pricing method followed by the Taxpayer whereby the net cost plus margin earned from rendering software development and related services (“software services”) to associated enterprises (AEs) were compared with the operating profit margin earned from rendering software services to unrelated parties.
Padam Prakash (HUF) vs. ITO (ITAT Delhi Special Bench). If the application filed by the assessee is viewed in the light of aforementioned judicial pronouncements, then it will become clear that the relief which is being sought by the assessee by way of impugned rectification application is not legally tenable for the reason that the Tribunal has no power to adjudicate upon subsequent application filed u/s 254(2). Here, it may be the case of the assessee that earlier order against which impugned rectification application is filed is also an order passed on subsequent application, then the only course permissible to the assessee is to file an appeal against that order and not to approach the Tribunal to contend that the said order was an invalid order, therefore it should be recalled.
Delhi bench of the Income-tax Appellate Tribunal (the Tribunal), in the case of DCIT v. Select Holiday Resorts Pvt. Ltd. (ITA Nos. 1184 & 2460/Del/2008) (Judgment Date: 23 December 2010, Assessment Years: 2004-05 & 2005-06) held that where a parent company merged with its subsidiary, the benefit of brought forward and set off of losses under Section 79 of the Income-tax Act, 1961 (the Act) claimed by the amalgamated company, cannot be disallowed on the grounds that there was a change in the shareholding of more than 51 percent of the share capital of the subsidiary company since there was no change in control and management of amalgamated company pre and post merger.
