Gujarat High Court
The Principal Commissioner Of ... vs Fag Bearings India Ltd. on 20 January, 2020
Author: Bhargav D. Karia
Bench: J.B.Pardiwala, Bhargav D. Karia
C/TAXAP/862/2019 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/TAX APPEAL NO. 862 of 2019
With
R/TAX APPEAL NO. 864 of 2019
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THE PRINCIPAL COMMISSIONER OF INCOME-TAX, VADODARA 1
Versus
FAG BEARINGS INDIA LTD.
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Appearance:
MR.VARUN K.PATEL(3802) for the Appellant(s) No. 1
for the Opponent(s) No. 1
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CORAM: HONOURABLE MR.JUSTICE J.B.PARDIWALA
and
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
Date : 20/01/2020
ORAL ORDER
(PER : HONOURABLE MR.JUSTICE BHARGAV D. KARIA, J.)
1. These Tax Appeals are filed under Section 260A of the Income-tax Act, 1961 (for short 'the Act, 1961'), arising out of the order dated 30.04.2019, passed by the Income Tax Appellate Tribunal, 'D' Bench, Ahmedabad (for short the 'Tribunal') for A.Y.2004-05 and A.Y.2005-06 in ITA No.4565/Ahd/2007 and ITA No.1529/Ahd/2009 respectively.
2. In the Tax Appeal No.862 of 2019, the substantial questions of law, as proposed by the Revenue, read thus:
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"(a) Whether in the facts and
circumstances of the case, the learned ITAT has erred in law and on facts in benchmarking the ALP at entity level in violation of Section 92 of the Income Tax Act, 1961 according to which ALP is to be computed on transaction to transaction level?
(b) Whether in the facts and circumstances of the case, the learned ITAT has erred in law and on facts in selecting Transactional Net Margin Method (TNMM) for benchmarking royalty disregarding Comparable Uncontrolled Price (CUP), the most appropriate method as per the settled legal position?
(c) Whether in the facts and circumstances of the case, the learned ITAT has erred in law and on facts in allowing the entire depreciation of Rs.34,22,521/- on data-processing machines in the computation of income of the DTA unit without appreciating that the assessee was using these machines along with ASP R3 software for controlling the functions of its entire organization comprising DTA unit and tax- free EOU unit?
(d) Whether in the facts and circumstances of the case, the learned ITAT has erred in law and on facts inallowing the deduction of the entire advertisement expenses of Rs.2,06,78,311/- in the computation of the taxable income of the DTA unit?"
3. In the Tax Appeal No.864 of 2019, the substantial questions of law, as proposed by the Revenue, read thus:
"(a) Whether in the facts and circumstances of the case, the learned ITAT has erred in law and on facts in benchmarking the ALP at entity level in violation of Section 92 of the Income Tax Act, 1961 according to which ALP is to be computed on transaction to transaction level?
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(b) Whether in the facts and
circumstances of the case, the learned ITAT has erred in law and on facts in selecting Transactional Net Margin Method (TNMM) for benchmarking royalty disregarding Comparable Uncontrolled Price (CUP), the most appropriate method as per the settled legal position?
(c) Whether in the facts and circumstances of the case, the learned ITAT has erred in law and on facts in allowing the entire depreciation of Rs.5,68,979/- on data-processing machines in the computation of income of the DTA unit without appreciating that the assessee was using these machines along with ASP R3 software for controlling the functions of its entire organization comprising DTA unit and tax-free EOU unit?
(d) Whether in the facts and circumstances of the case, the learned ITAT has erred in law and on facts inallowing the deduction of the entire advertisement expenses of Rs.1,86,29,592/- in the computation of the taxable income of the DTA unit?"
4. So far as the question Nos.(A) and (B) are concerned in both the Tax Appeals, the same are admitted by this Court in Tax Appeal No.228 of 2018 and Tax Appeal No.234 of 2018.
5. Accordingly, the Tax Appeals are admitted qua the questions Nos.(A) and (B) in both the appeals. To he heard with Tax Appeal No.228 of 2018 and Tax Appeal No.234 of 2018.
6. So far as the question Nos.(C) and (D) are concerned in both the Tax Appeals, the same are not considered, in view of the findings of the facts, Page 3 of 4 Downloaded on : Mon Feb 17 07:07:49 IST 2020 C/TAXAP/862/2019 ORDER given by both the authorities below, as the issues are purely factual in nature.
7. The Tax Appeals stand dismissed qua the question Nos.(C) and (D).
(J. B. PARDIWALA, J) (BHARGAV D. KARIA, J) PALAK Page 4 of 4 Downloaded on : Mon Feb 17 07:07:49 IST 2020