Case Law Details
Hyundai Motor India Ltd. Vs ACIT (ITAT Chennai)
ITAT Chennai held that subsidy received from Government of India under the Focus Market Scheme is Revenue in nature. The same cannot be at any stretch of imagination considered as capital in nature.
Facts- The assessee is a wholly owned subsidiary of M/s. Hyundai Motor Company Ltd., South Korea. The assessee is in the business of manufacturing and selling passenger cars in domestic and export markets.
The case was taken up for scrutiny and during the course of assessment proceedings, a reference was made to JCIT (Transfer Pricing) for determination of Arm’s Length Price (ALP) of international transactions of the assessee with its AEs. The learned TPO vide its order dated 29.01.2016 has suggested certain transfer pricing adjustments towards downward adjustment to the value of imports and upward adjustment for brand development services.
AO, in pursuant to directions of the ld. TPO, has passed draft assessment order u/s.143(3) r.w.s.144C(1) of the Act on 29.03.2016 and made transfer pricing adjustments as suggested by the TPO at Rs.443,34,47,898/-. AO had also proposed certain Corporate Tax adjustments including disallowances u/s.14A, r.w.r.8D of IT Rules, 1962, disallowance of subsidy received towards capital expenditure, disallowance of Focus Marketing Scheme expenses, and disallowance of bonus / performance reward u/s.43B(c) of the Act.
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