No international transaction with the related party in absence of documentation

Colgate Palmolive (India) Ltd. v. ACIT (ITA No. 6073/Mum/2014 and ITA No. 2778/Mum/2011)

The taxpayer was a 51% subsidiary of a U.S. corporation, and was engaged in manufacturing and marketing of diversified pharmaceutical products.

The Transfer Pricing Officer examined the advertising, marketing, and promotion expenses and found that they were about 13% of sales (compared to an industry average of 6.39%), and that the royalty payment made by the taxpayer reflected steep growth from 0.15% in AY 1999-2000 to 0.96% in AY 2005-2006. Based on these findings, it was determined that sales on which a royalty was being paid reflected a “faster growth” benefiting the related party and that the advertising, marketing, and promotion expenses had to be shared by the related party.

Continue reading


Exxon Mobil Company India P. Ltd, … vs Addl Cit Cir 3(1), Mumbai

Income Tax Appellate Tribunal – Mumbai on 21 February, 2018


ITA no.6708/Mum./2011
(Assessment Year : 2007-08)

ExxonMobil Company India Pvt. Ltd.
Kalpataru Point, Plot no.107
                                                      ................ Appellant
Road no.8, Sion (East)
Mumbai 400 022 - AACE3157H


Addl. Commissioner of Income Tax
                                                    ................ Respondent
Range-3(1), Mumbai

                   Assessee by     : Shri Girish Dave a/w
                                     Ms. Kadambari Dave
                   Revenue by      : Shri Saurabh Deshpande a/w
                                     Shri Jayant Kumar

Date of Hearing - 06.12.2017                Date of Order - 21.02.2018



Captioned appeal by the assessee is against the order passed under section 143(3) r/w section 144C(13) of the Income-tax Act, 1961 (for short “the Act”) for the assessment year 2007-08, in pursuance to the directions of the Dispute Resolution Panel (DRP).

2. In ground no.2 with its sub-grounds, the assessee has raised number of issues relating to transfer pricing adjustment made by the ExxonMobil Company India Pvt. Ltd.

Transfer Pricing Officer and sustained by the DRP. However, at the time of hearing, learned counsel for the assessee, Shri Girish Dave, has restricted his argument to the following issues:-

(i) Rejection of comparables under technical services segment;

(ii) Selection / rejection of comparables in back office support service segment; and

(iii) Benefit of working capital and risk adjustment.

3. Brief facts are, the assessee an Indian company is a subsidiary of ExxonMobil Corporation Group of USA. The assessee is basically involved in providing services of information dissemination, maintaining customer relationship and market development to its overseas Associated Enterprise (A.E) ExxonMobil Chemical Co., USA. It also provides application research and technical services as well as back office support services to its A.E. Though, as per the transfer pricing order, the assessee has entered into various international transactions with its A.E., however, in the present appeal, we are concerned with the international transaction relating to provisions of technical services and back office support services. As far as the provision of technical services to A.E. is concerned, the assessee bench marked such transaction by applying Transaction Net Margin Method (TNMM) as the most appropriate method. In the search process conducted by the assessee, ten companies stated to be functionallyExxonMobil Company India Pvt. Ltd. similar to the assessee were selected as comparable.

Continue reading

Danisco India Pvt Ltd v. Union of India

Delhi High Court (Feb 20, 2018)

Hon. Delhi High Court held that in case of conflict between the tax rate prescribed in Section 206AA of the Income Tax Act and in a tax treaty, the tax treaty rate would apply. The requirement (pre amendment) that TDS should be deducted at 20% on payments to non-residents even though the income is chargeable to tax at a lower rate under the DTAA is not acceptable because the DTAA has primacy over the Act. S. 206AA (as it existed) has to be read down to mean that where the non-resident payee is resident in a territory with which India has a Double Taxation Avoidance Agreement, the rate of taxation would be as dictated by the provisions of the treaty.

Continue reading

M/S.Daimler India Commercial … vs Deputy Commissioner Of Income Tax

Madras High Court


 RESERVED ON         : 04.01.2018
		PRONOUNCED ON :    30.01.2018     


W.P.No.43435 of 2016 and
 WMP.Nos.37296 & 37297 / 2016

M/S.Daimler India Commercial Vehicles Private Limited,
SIPCOT Industrial Growth Centre,
Mathur Road,
Oragadam Sriperumbudur,
Kancheepuram, Chennai,
Tamil Nadu  602 105
acting through its
Authorised representative Mr.Rishab jain			 ...     Petitioner 

1.Deputy Commissioner of Income Tax,
   Corporate Circle-1(1),
   Room No.511, Wanaparthy Block,
   121, M.G.Road, Nugambakkam,

2.Assistant Commissioner of Income Tax (OSD),
   Corporate Range 1,
   Room No.603, 6th Floor,
   Wanaparthy Block,
   121, Mahatma Gandhi Road,
   Aayakar Bhavan, Nungambakkam,
   Chennai-600034.				               ...  Respondents

PRAYER:Petition filed under Article 226 of the Constitution of India to issue a Writ of Certiorari calling for the records relating to the impugned notice in PAN:AABCF1590N passed by the 1st respondent dated 24.03.2016 issued under Section 148 of the Income tax Act relating to assessment year 2009-10 and consequential impugned order in PAN:AABCF1590N / 2009-10 passed by the 2nd respondent dated 25.10.2016.

		For Petitioner    :  Mr.Ajay Vohra, SC for Mr.N.P.Vijaya kumar 
		For Respondents:  Mrs.Hema muralikrishnan.


The petitioner is a Company incorporated during 2007 under the provisions of the Companies Act, 1956 with its main objects being Designing, Manufacturing, Distributing, Selling and conducting research and development of commercial vehicles and related products and components for Indian and overseas markets. In this writ petition, the petitioner has challenged the notice issued by the 1st respondent under Section 148 of the Income Tax Act, 1961 (hereinafter referred as ‘the Act’ for brevity) stating that he has reasons to believe that the petitioner’s income chargeable to tax for the assessment year 2009-10 has escaped assessment within the meaning of Section 147 of the Act. The other order which is impugned in this writ petition is the order passed by the 1st respondent dated 25.10.2016 rejecting the petitioner’s objection for reopening.

Continue reading

Dcit, New Delhi vs M/S. Oracle (Ofss) Bpo Services … on 31 October, 2017

           (DELHI BENCH 'E' : NEW DELHI)


                    ITA No.6974/Del./2014
                (ASSESSMENT YEAR : 2009-10)

DCIT, Circle 19 (1),         vs.   M/s. Oracle (OFSS) BPO Services Ltd,
New Delhi.                         DLF Infinity Tower A, 3rd Floor,
                                   DLF Cyber City, Phase - II,
                                   Gurgaon - 122 002.

                                        (PAN : AABCE1201F)

       (APPELLANT)                            (RESPONDENT)

      ASSESSEE BY : Shri Tarandeep Singh, CA and
                    Shri Shubham Gupta, Advocate
      REVENUE BY : Shri A.K. Yadav, Senior DR

                    Date of Hearing :     30.10.2017
                    Date of Order :       31.10.2017



The Appellant, Deputy Commissioner of Income-tax, Circle 19 (1), New Delhi (hereinafter referred to as ‘the Revenue’) in by filing the present appeal sought to set aside the impugned order dated 30.09.2014 passed by the Commissioner of Income-tax (Appeals)-XVI, New Delhi qua the assessment year 2009-10 on the grounds inter alia that :-

“1. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in directing the Assessing Officer to grant deduction in respect of (1) provision for bonus of Rs.1,01,701/-, (2) Sale of fixed assets of Rs.21,607/- and (3) Foreign exchange gain on capital expenditure of Rs.5358/- which were claimed by the assessee by filing revised computation of income during the course of assessment proceedings which is not permissible under the Act.

2. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in directing the AO to grant deduction u/s 10A in respect of (1) unpaid bonus inadmissible u/s 43B of Rs. 87,98,002/-, (2) Provision for doubtful debts of Rs. 1,24,67,570/- and payment of employees contribution of PF of Rs.1,85,038/- which was not claimed by the assessee in the return income or by filing revised return but was claimed by way filing a revised computation of income during the course of assessment proceedings which is not permissible under the Act.”

Continue reading

Principal Commissioner of Income Tax v. Interra Infotech (India ) Pvt. Ltd.

August 25, 2017

The High Court upheld ITAT order rejecting adoption of comparables by AO for preceding AY.

The assesssee is engaged in the business of development of computer software. The AO observed that there were no abnormal changes in the facts and circumstances of the instant case of AY 09-10 from assessee’s own case of AY2008-09. Therefore  the AO did not make any reference to the TPO and proceeded to apply those comparables which were adopted for preceding AY.

CIT (A) ruled in favour of the assessee .  ITAT also ruled in favour of the assesse holding that the AO was not justified in adopting comparables selected for AY2008-09 without undertaking proper analysis.

Continue reading

Mitsubishi Corporation India vs DCIT, Circle- 16(2), New Delhi

( ITAT New Delhi) (22 September, 2017)

The taxpayer is a part of Sogo Sosha group which play an important role in linking buyers and sellers for products ranging from bulk commodities to specialized equipments. Mitsubishi Corporation India Private Limited (MCIPL) is a wholly owned subsidiary of Mitsubishi Corporation (MC) and was incorporated in 1996. The company is a part of Sogo Shosha function performed by MC as a whole. Its equity share capital is held by MC and Mitsubishi Australia Limited.

Accordingly, MC Group entitles constituted MCIPL’s AEs by virtue of common control and capital. Major business groups that MCIPL deals in are Chemical, Energy, Metal Machinery Living Essentials and Industrial Finance, Logistics & Development Group.

Within these groups, Mitsubishi India deals in various commodities. However, majority of operations of the company are from “Chemicals” group.

Assessing Officer noticed from the financials of the assessee that the assessee has made purchases from AEs without deducting tax at source in compliance to the provisions contained u/s 195 of the Act.

Continue reading