CASE LAWS

2018-TII-05-SC-INTL

PR CIT Vs KRISHAK BHARTI COOPERATIVE LTD: SUPREME COURT OF INDIA (Dated: February 16, 2018)

Income Tax - India-Oman DTAA - Articles 8, 11 & 25

Keywords - branch office - dividend income - erroneous - multi state co-operative society - permanent establishment - prejudicial to revenue

The Revenue Department preferred present SLP challenging the judgment, whereby the High Court had held that, in case of doubts relating to implementation of provisions of a DTAA, Revenue should address them to the concerned authorities of the other country rather than recording a finding on the same. The High Court in its impugned judgment also opined that, as per the amended Article 8 of India-Oman DTAA, dividend distributed by all companies, including the tax exempt companies would be exempt from payment of income tax in the hands of the recipients and Indian Investors can obtain relief in India under Article 25 (4) DTAA.

2018-TII-170-ITAT-MAD-TP

INDUSTRIES DEL RECAMBIO INDIA PVT LTD Vs DCIT: ITAT CHENNAI (Dated: March 23, 2018)

Income tax - ALP - additional document - functional difference - basic character of goods - non AE transactions - TNMM

The Assessee company had preferred present appeal challenging the action of TPO in selection of comparables. According to Assessee's counsel, the manufacturing process and design of the products differs as per the specifications of the customer. Even though there was a small variation, there was no change in the basic character of the finished goods. The TPO however selected the comparable companies whose manufacturing product was different from one manufactured by the assessee, and therefore, there was a functional difference between the comparable companies and that of the assessee. Moreover, according to Assessee's counsel, the adjustment had to be restricted only with regard to transaction of the assessee with AEs, but the TPO had taken the entire transaction of assessee. The Assessee had therefore filed revised segmentation based on cost audit along with details of allocation keys used therein, as an additional evidence which was not filed before the TPO and DRP.

On appeal, the ITAT held that,

Whether additional documents in form of segmental details of comparables, merits re-examination for purpose of determination of correct ALP - YES: ITAT

+ admittedly, the documents filed before this Tribunal as additional evidence were not available before the AO and the TPO. Therefore, this Tribunal is of the considered opinion that in order to determine the correct ALP, the TPO has to re-examine the matter. The very object of the income-tax proceeding is to assess the correct taxable income. Therefore, remitting the matter back to the file of the AO for reconsideration in the light of the additional material filed by the assessee may not prejudice the interests of Revenue in any way. The AO shall re-examine the matter and refer the matter to the TPO for determination of ALP after considering the additional evidence filed by the assessee and thereafter follow the procedure prescribed u/s 144C of the Act.

Case remanded