CIT v Bovis Lend Lease (India) (P.) Ltd. IT Appeal Nos. 15 to 22 of 2010; IT Appeal Crob. NoS. 2 to 9 of 2011† [Karnataka High Court] Background: The assessee, a private limited company, carrying on the business of project and construction management entered into a management services agreement LLAH, Singapore. Under the agreement, LLAH was to provide services like administration, personnel, legal, finance and accounting information, marketing support, insurance matters, treasury management and information technology to the assessee. LLAH filed applications under Section 197 of the Act. LLAH furnished copies of the invoices raised by them to the AO. It was contended that the consideration paid under the agreement is by way of reimbursement of actual expanses. The assessing authority issued certificates authorizing the payment without deduction of tax. Later, the Authority issued a notice under Section 201 calling upon the assessee to show cause as to why he should not be treated, as an assessee in default under Section 201(1) and also why interest should not be levied under Section 201 (1A) as the assessee has not deducted tax as required under Section 195(1) of the Act at the time of making a credit entry. The assessing authority held that the intention of the assessee was to get the benefit of LLAH’s expertise and experience in management services. The consideration was paid for such services.
Daily Archives: June 26, 2012
Mainetti India (P.) Ltd. v. ACIT [IT APPEAL NO. 1789 (MDS.) OF 2011] Chennai ITAT Background: The assessee is in the business of manufacturing plastic garment hangers. As the assessee is a part of the Mainetti global group, it used to buy and sell the hangers from/ to its group concerns. The assessee has purchased from its AE in Hongkong, Srilanka, Malayasia, Pakistan and RANDY Asia and has sold to its AE in Srilanka, Korea, Hongkong, Gulf, Egypt, Bangladesh, Malayasia, Taiwan, UK and Pakistan. On the purchase, the assessee has a positive differential i.e. the assessee purchases at a lower price from its AE than the non-AE and when its sales to the AE, its selling price is lower than the selling price as compared with the non-AE When computing the ALP, the AO had taken into account only those transactions where the sale price to Associate Enterprise (AE) was lower than the sale price to non-Associated Enterprise (non-AE) and ignoring the instances where the purchase-price from and sale price to AE exceeded the purchase-price from and the sale price to non-AE. Thus, while applying CUP method for determining the ALP, TPO had considered only positive deviations and had ignored negative deviations.
TP Update: Both positive & negative adjustments to be considered while computing ALP – Chennai ...
Dongfang Electric Corporation v DDIT (I.T.A. No.: 833/Kol/2011) Kolkata ITAT Background: The Assessee, a Chinese company, had entered into contracts with Indian entities for setting up of turnkey thermal power projects. Each of these contracts were divided into two parts – one for supply of equipment and materials of thermal power plant and second for erection and services of units of main plant along with some common facilities.The Assessee had a project office in India which constituted a permanent establishment (PE) for the assessee in India under the India-China DTAA. The consideration receivable by the assessee was separately provided in respect of (i) offshore supply of equipment, spare parts and tools outside India (offshore supply) and (ii) for local supply, design, engineering, construction, erection, installation, testing and commissioning of thermal power units (onshore activities).