Kloeckner Desma Machinery Private Ltd. Vs DCIT (ITAT Ahmedabad)
Summary: The consolidated order concerns one assessee appeal for AY 2012-13 and cross appeals by the assessee and Revenue for AY 2013-14. ITA(TP) No. 555/Ahd/2017 arose from the final assessment order passed under section 143(3) read with sections 144C(13) and 92CA of the Income-tax Act, 1961, pursuant to the directions of the Dispute Resolution Panel (DRP), for AY 2012-13. ITA No. 2579/Ahd/2017 was the assessee’s appeal and ITA No. 2322/Ahd/2017 was the Revenue’s appeal for AY 2013-14. Since the appeals involved substantially common facts, particularly transfer pricing adjustments relating to royalty and commission, they were heard together and disposed of by a consolidated order.
For AY 2012-13, Kloeckner Desma Machinery Private Limited, a downstream subsidiary of Kloeckner Desma Elastomertechnik GmbH, Germany, was engaged in manufacturing vertical injection moulding machines, turnkey projects, moulds and spares and providing after-sales service support. The assessee’s return declared total income of Rs.11,46,98,279/-. Following scrutiny and a reference under section 92CA(1) to the Transfer Pricing Officer (TPO), the TPO proposed aggregate transfer pricing adjustments of Rs.86,96,257/-, comprising Rs.19,18,458/- towards royalty and Rs.67,77,799/- towards commission.
The Assessing Officer thereafter passed a draft assessment order under section 144C(1), proposing the transfer pricing adjustments together with additions relating to long-term capital gain and disallowance under section 40(a)(i). The assessee’s objections were considered by the DRP, which issued directions dated 29.11.2016, following which the Assessing Officer passed the final assessment order determining total income at Rs.12,76,63,060/-. The assessee challenged the sustained additions and disallowances before the Tribunal.
