| 2016-TII-INSTANT-ALL-319 | 26 April 2016 |
simply inTAXicating - Turf War: Intellectual Property Vs Competition Law CIRCULARS Payment of interest on refund under section 244A of excess TDS deposited under section 195 of the Income tax Act, Commencement of limitation for penalty proceedings under sections 271D and 271E of the Income tax Act, 1961 CASE LAWS KSHEMA TECHNOLOGIES LTD Vs ACIT : BANGALORE ITAT (Dated: April 22, 2016) Income Tax - Sections 10A, 92C(3), 234B & 271(1)(c). Keywords: working capital adjustment - selection of comparables - ALP determination - TNMM - entity level - AE - segment wise data - commission - deemed adjustment - operating margin. Whether in case CIT(A) has rejected the entity level profit margin of assessee for the purpose of bench marking the international transactions with ALP, it is required to redo exercise of determination of ALP as per the provisions of transfer pricing - YES: ITAT Whether if the services rendered by assessee relating to the development of computer software is deemed to be part of export turnover of computer software outside India, AO/TPO cannot reduce the expenses from the export turnover for computation of deduction u/s 10A - YES: ITAT Whether in case the export turnover forms part of the total turnover, where an item is excluded from the export turnover, the same should also be reduced from the total turnover to maintain parity between numerator and denominator while calculating deduction u/s 10A - YES: ITAT Assessee's appeal allowed MITSUI & CO INDIA PVT LTD Vs DCIT : DELHI ITAT (Dated: April 25, 2016) Income tax - Sections 14A, 35AC, 37(1), 92CA, 143(3) & 195 Keywords - ALP - business profits - berry ratio - donation to SOS - exports from AE - liasioning services - offshore supplies - PE - prior period expenditure - sales support services - service fee - related party transaction - TDS & TNMM Whether rendering of routine ancillary & support services to its AE abroad by the assessee for facilitating the export & import transactions carried out by such AE with its customers, can be characterized as 'trading activity' - NO: ITAT Whether the nature of assessee's activity from a service provider can be recharacterised to a trader, merely on ground that the assessee was having a small level of trading activity in its name while rendering business support services to its AE - NO: ITAT Whether the berry ratio of operating profit to operating expenses is the appropriate PLI, where a business entity neither assumes any significant inventory risk or perform any functions on the goods traded nor add any value to the same, by use of unique intangibles - YES: ITAT Whether cost of goods sold by the AEs can be included in cost base of the service/commission segment of the assessee for the purpose of computing ALP, when the assessee has only rendered support services without incurring any cost in respect of such sales - NO: ITAT Case remanded |
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