TPO has not assigned any valid reason for rejecting the method adopted by the assessee for the determination of ALP with its transaction with ODSI. Where an assessee has followed one of standard methods of determining ALP, such a method cannot be discarded in preference over transactional profit methods,
AO had made assessment on the information/material available in the return of income. The information regarding the gift was available in the return of income as capital account had been credited by the assessee by the amount of gift. Similar was the position in relation to addition under section 2(22)(e). T
Section 148 mandates issue of notice before assessment, reassessment or computation u/s 147. As per section 148, it is mandatory that the Assessing Officer shall serve on the assessee a notice required him to furnish a return. The expression “Assessing Officer” used in the section 148 means ‘the Assessing Officer vested with the jurisdiction over the assessee as stipulated in the definition u/s 2(7A) by virtue of the directions / orders passed u/s 120, sub-section (1) & (2)’.
In our opinion, the exercise of ascertaining ALPs has to be done by the TPO keeping in view the well laid down scheme in the relevant provisions of the Act and addition, if any, on account of TP adjustment, has to be made only after doing such exercise. We, therefore, restore this issue to the file of the AO/TPO with a direction to do such exercise and make addition, if any, on this issue after completing such exercise in accordance with law.
Raj Babbar v. ITO – Based on the factual matrix of the present case, where the assessee invested total full value consideration of Rs. 16,87,000/- (as per the SRO) in the residential house, which is one house only as it has only one kitchen, and these FVC is less than the invested amounts of 17,65,752/-, during the specified period, the assessee is not chargeable to tax on the capital gains u/s 45 of the Act.
The Assessing Officer has computed the income from Bhutan operations at Rs. 68,63,57,400/- and included the same in the total income of the assessee, then the relief u/s 91 of the I T Act is allowable @ 8.53% on the said income, which is subjected to tax in both the countries. Accordingly, we direct the Assessing Officer to give relief u/s 91 by calculating the average rate of tax of 8.53% on Rs. 68,63,57,400/- subject to the total tax paid /payable in either of the countries.
Sections 50 & 50C operate in two different fields and if the value adopted by the stamp valuation authority is accepted by the purchaser/seller there cannot be any variation for limited purposes of computing the consideration received, under section 50C of the Income Tax Act, 1961.
The TPO while rejecting the idle capacity, however, did not discuss anything about the arms length margin fixed at 11.96 per cent. This indicates that assessee’s TP study has not been considered by the TPO. The assessee has selected ten comparable companies and summary of net cost + margin varies from -6.04 per cent to 19.06 per cent.
In so far as the DTAA between India and Canada is concerned, it is observed that article 12(4) thereof gives the definition of the term fees for include services while article 12(5)(a) provides that notwithstanding the said definition given in article 12(4), fees for included services does not include amount paid for services that are ancillary and subsidiary as well as inextricably and essentially linked, to the sale of property.
We, next, consider the assessee’s argument that the document itself explains the source of the money with it (as on the relevant dates), so that the mandate of the section is satisfied, and no addition could be made. That is, the Department cannot take a contrary stand, accepting the document as true, yet overlooking the fact that the same itself clearly spells out the source of the money.
