Search Results Page

Search Results

1 - 10 of 30 (0.25 seconds)
M/S Instrumentarium Corporation Ltd., ... vs Assessee on 15 July, 2016 cites

Aztec Software And Technology Service ... vs Acit on 12 July, 2007

but then this limitation comes into play only when the income of the assessee, in whose hands income from international transactions is to be computed, stands reduced or the loss in his hands stands increased. Learned DR also submits that in the light of a five member bench decision of this Tribunal in the case of Aztech Software & Technology Limited Vs ACIT [(2007) 107 ITD SB 141 (Bang)], the application of transfer pricing, which must be applied no matter how inequitable the legal provisions are, in the present case cannot be questioned. He further points out just because ALP adjustments are made in the hands of the non-resident associated companies, these ALP adjustments will not entitle the Indian AEs to get any deductions in respect of the ALP adjustments. It is contended that learned counsel has misinterpreted the second proviso to suggest that corresponding deduction will be available in the hands of the AE on the ground that no arm's length price has actually been paid by the Indian AE. It is stated that there is no provision in the statue enabling such a deduction on account of the ALP adjustment and in the hands of the affected AE. There is thus no loss, real or notional, to the Indian tax revenue by making ALP adjustments in the hands of the non-resident companies in respect of higher interest or fees that the non-resident companies, according to the TPO, should have charged from the Indian AEs. Learned Commissioner (DR) thus points out that this theory of erosion of Indian tax base is ill conceived. He also submits that, in any event, time value of money cannot be ignored and even if there was to be any impact of this ALP adjustment on the taxability in the hands of the Indian AE, it would have been only in a subsequent year and there is nothing on record to even remotely suggested that discounted net present value of this future loss is more than the tax revenue at present. He submits that a rupee in tax, say five years from now, I.T.A. Nos.1548 and 1549/Kol/2009 Assessment years: 2003-04 and 2004-05 Page 17 of 41 cannot be treated as a rupee in tax today. It is submitted that the Indian AE is incurring losses as on now and as such tax advantage to the AE, even if any, is purely hypothetical at this stage. The loss to the revenue, for the purpose of Section 92(3), has to be a real loss and it cannot be a hypothetical loss which depends on the assessee not only making profits in the subsequent assessment years but making so much of profits as would set off all the losses incurred by the assessee. As for the Dispute Resolution Panel accepting the base erosion theory in the hands of the intervener, but declining to take it to the logical conclusion only on the ground that the assessee has suffered the losses in the relevant assessment year, learned Departmental Representative submits that at the relevant point of time the orders passed by the DRP were not appealable and that is the only reason that even when the revenue authorities did not agree with the interpretation given by the DRP, the matter could not have been carried further, but then in any event, the interpretation of law by the DRP does not bind this Tribunal. He points out that as the intervener himself accepts the views of the DRP do not bind the interpretation of law by this forum. It is, therefore, incorrect to say that the theory of taking a holistic view of taxability in the hands of all the AEs, as against the assessee alone, has been accepted by the revenue authorities. As for the CBDT circulars relied upon by the assessee, it is submitted that there is no dispute that these circulars are binding on the field authorities but then since there is no deduction available to the AEs in respect of ALP adjustments made in the hands of the assessee non-resident companies, there is no reduction in overall incidence of taxation as a result of the ALP adjustments being made in the hands of the non-resident companies earning income from their Indian AEs- which is sine qua non for the non application of transfer pricing provisions in such cases. Learned DR submits that as far as the circulars are concerned, these circulars at best deal with such situations in which there is overall reduction of tax incidence- which is certainly not the case before us. Coming to the Morgan Stanley decision (supra), leaned counsel points out that admittedly this decision is in the context of the profit attribution to the permanent establishment and it does not, therefore, have any bearing on the issue before us. He points out that the short issue before us is applicability of Section 92(3) which was not even the subject matter of consideration by Hon'ble Supreme Court. As for I.T.A. Nos.1548 and 1549/Kol/2009 Assessment years: 2003-04 and 2004-05 Page 18 of 41 the loss to the revenue as a result of the impugned ALP adjustments, learned DR submits that it is for the revenue to decide what is best for the revenue, and just as much as the revenue is prevented from sitting in judgment over how should the assessee conduct his business, the assessee should not step into the shoes of the revenue authorities either. If the assessee thinks that as a result of the ALP adjustments being made in the hands of the assessee, the tax base of the Indian revenue is being eroded because taxability in the hands of the assessee's AEs in India will be adversely affected, the assessee cannot be aggrieved of the same. The assessee stands to gain in such an eventuality, and no assessee in the world, and least of all these hard nosed business entities, can be aggrieved of being subjected to lower overall taxation. It is not their sense of fair play, but compulsions of their vested interests, which motivate such submissions. He submits that it is interesting to note that the assesse was earlier charging interest on loans given to the Indian companies but it was only when the losses suffered by the Indian AEs surfaced, and the Indian AEs did not gain any tax advantage from these interest payments, that the assessee stopped charging the interest on loans to the Indian AEs. By no stretch of logic, therefore, it could be said that not charging the interest was a bonafide business decision. As the developments suggest, according to the learned Departmental Representative, the decision of the foreign parent company not to charge interest on loans to the Indian AEs was triggered by the losses being incurred by the Indian AEs. Learned DR submits that in any event on the basis of assessee's perceptions about some conceptual notions underlying these legal provisions, the clear mandate of law cannot be read down. What is being referred to as erosion of tax base of the Indian revenue is, according to the learned DR, based on some broad purpose and notions of the transfer pricing and with complete disregard to the facts of the present cases. Learned DR also invited our attention to the fact that the assessee has been completely indifferent to the notices served by the Assessing Officer and that no information was furnished by the assessee at the assessment stage. The assessee did not, despite specific requisition to that effect, even file the income tax return and has been completely non cooperative. The conduct of the assessee does not inspire any confidence. Learned counsel submitted that while, according to the learned counsel, stand of the assessee has been that there are no I.T.A. Nos.1548 and 1549/Kol/2009 Assessment years: 2003-04 and 2004-05 Page 19 of 41 disputes about bonafides of interest free loan, the fact of the matter is that the assessee has not even given the basic details of dealings with the Indian AE and it was left to the Assessing Officer to compile information from the secondary sources and frame the assessment on that basis.
Income Tax Appellate Tribunal - Bangalore Cites 100 - Cited by 254 - Full Document

Commissioner Of Income-Tax vs M/S. Sun Engineering Works (P.) Ltd. on 17 September, 1992

............... It is neither desirable nor permissible to pick out a word or a sentence from the judgment of this Court, divorced from the context of the question under consideration and treat it to be the complete 'law' declared by this Court. The judgment must be read as a whole and the observations from the judgment have to be considered in the light of the questions which were before this Court. A decision of this Court takes its colour from the questions involved in the case in which it is rendered and while applying the decision to a latter case, the Courts must carefully try to ascertain the true principle laid down by the decision of this Court and not to pick out words or sentences from the judgment, divorced from the context of the questions under consideration by this Court, to support their reasonings.
Supreme Court of India Cites 46 - Cited by 1062 - Y Dayal - Full Document
1   2 3 Next