sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
Latest Expert Exchange
From the Courts »
 Shri Amar Nath Goenka, New Delhi – 110 070. vs. The ACIT, Circle-20(1), New Delhi.
 M/s KSD Charitable Trust, C/o Ganesh Cold, Storage, Meerut VS. Assistant Commissioner of Income Tax, Circle-1,
 Avaya India Pvt. Ltd. 202, Platina, 2nd Floor, Plot No. C-59, G-Block, Bandra Kurla Complex, Bandra (E), Mumbai, Maharashtra. vs. Addl. Cit Special Range-1 New Delhi.
 Sita Bhagi 83, Sukhdev Vihar, New Delhi. vs. ACIT Circle 65(1) New Delhi.
 ACIT vs. Janak Global Resources Pvt. Ltd (ITAT Chandigarh)
 DCIT vs. Rakesh Saraogi & Sons (HUF) (ITAT Raipur)
 FIS Global Business Solutions India Pvt. Ltd vs. PCIT (Delhi High Court)
 DCIT International Taxation, Circle-Noida, Aayakar Bhawan, Sector-24, Noida vs. Jaypee Sports International Ltd., Sector-128, Noida.
 Nokia India Pvt. Ltd., 1st Floor, Tower A, SP Infocity, Industrial Plot No. 243, Udyog Vihar, Phase-1, Dundahera, Gurgaon, Haryana vs. DCIT, Circle 13 (1) New Delhi
 Sh. Nafe Singh Gahlawat, H. No. 1032, Sector-14, Faridabad vs. Income Tax Officer, Ward-II(3), Faridabad
 Dr. Ashok Seth, B-30, Geetanjali Enclave, New Delhi. vs. ACIT, Circle-61(1), New Delhi.

Deputy Commissioner of Income Tax Circle 1(1), New Delhi Vs. Alcatel India Limited (now known as Alcatel Lucent India Pvt Ltd) 1st floor, 5 Sikandara Road, New Delhi 110001
November, 27th 2014
                                                                       I.T.A. No.: 962/Del/12
                                                                    Assessment year 2003-04

                                                                                   Page 1 of 4

                             DELHI I BENCH, NEW DELHI

                 [Coram: Pramod Kumar (Accountant Member)
                      and C. M. Garg (Judicial Member)]

                               I.T.A. No.: 962/Del/12
                              Assessment year 2003-04

Deputy Commissioner of Income Tax
Circle 1(1), New Delhi                                       ......................Appellant


Alcatel India Limited                                      ...................Respondent
(now known as Alcatel Lucent India Pvt Ltd)
1 st floor, 5 Sikandara Road, New Delhi 110001

Appearances by:

Yogesh Kumar Verma , for the appellant
Himanshu Shekhar Sinha , for the respondent

                                    O R D E R

Per Pramod Kumar:

1.       This appeal is directed against the order dated 26 th December 2011,
passed by the learned CIT(A) in the matter of assessment under section 143(3)
of the     Income Tax Act, 1961 (hereinafter re ferred to as `the Act'), for the
assessment year 2003-04.

2.       Grievance raised by the Assessing Officer is as follows:

         That the learned CIT(A) has erred in concluding that the
         international transactions entered into by the assessee are at arm's
         length and in deleting the addition of Rs 19,32,00,000 made by the
         AO on account of transfer pricing adjustments.
                                                                 I.T.A. No.: 962/Del/12
                                                              Assessment year 2003-04

                                                                             Page 2 of 4

3.    To adjudicate on this appeal, only a few material facts need to be taken
note of. The assessee is a wholly owned subsidiary of Alactel France an d is
engaged in the business of manufacturing and distribution of telecom
equipment and rendering of services. During the relevant financial period, the
assessee had entered into various international transactions with its AEs. The
assessee's business is i n various segments, namely (a) manufacturing, (b)
trading. (c) software, (d) technical services, (e) info gathering, (f) marketing,
and (g) others. While (a),(c),(d),(e),(f) segments were doing business only with
AEs, and segment (g) was doing business with non AEs, i.e. independent
enterprises, in segment (b), i.e. trading, the assessee was doing business with
the AEs as well as non AEs. In the course of proceedings before the TPO, the
transfer pricing approach of the assessee, so far as manufacturing segm ent
wherein the assessee had used CUP and TNMM, and trading segment, where the
assessee had employed RPM, was rejected. The TPO adopted the TNMM in
respect of these segments. It is not really necessary to refer to the reasons of
rejecting the methods of ascertaining the ALP, as employed by the assessee, as
there is no dispute now on that aspect of the matter. The issue in dispute is with
regard to the profitability of the non AE segments. In the course of applying the
TNMM and preparation of segregated results for manufacturing and trading
activity, the TPO reduced the components relatable to entire segment (c),(d),(e)
and (f) from overall profits. What was thus left out was profits of segment (a),
profits of segment (b) and profits of segment (g) on which PLI as per the TNMM
was applied. The assessee was aggrieved of this computation inasmuch as while
segment (a) consisted of all intra AE transactions, segment (b) partly contained
the transactions with non AEs, even on which TNMM was applied, and segment
(g) which only had transactions with non AEs on which also the TNMM was
applied. The contention of the assessee was that TNMM cannot be applied in
respect of transactions with non AEs. In appeal, the CIT(A) has accepted this
contention and restricted the TNMM application only in respect of the
international transactions with the AEs. Its on this basis that the impugned
relief of Rs 19,32,00,000 has been given. The Assessing Officer is not satisfied
and is in appeal before us.
                                                                   I.T.A. No.: 962/Del/12
                                                                Assessment year 2003-04

                                                                               Page 3 of 4

4.      We have heard the rival contentions, perused the material on record and
duly considered factual matrix of the case as also the applicable legal position.

5.      In principle, the issue is no longer res integra . It is well settled legal
position that the ALP adjustments can only be made in respect of international
transactions with the AEs and cannot extend to the transactions with non AEs.
There are large number decisions of the coordinate be nches, including in the
case of Alstom Projects India Ltd Vs ACIT [26 ITR (Trib) 322], holding so. In the
case of CIT Vs Stratex Networks India Pvt Ltd (354 ITR 304), Hon'ble
jurisdictional High Court has also accepted this position. Learned Departmental
Representative, even as vehemently relying upon the stand of the TPO, does not
dispute this legal position but he contends that the factual elements embedded
in this contention, at least on computation aspect, need to be verified by the
TPO. That is only arithmetical part giving effect to this principle. We see no
harm in this exercise.

6.      In view of the above discussions, we deem it fit and proper to uphold the
stand of the CIT(A) in principle but remit the matter for the limited purposes of
verifying the computation of excluding transactions with non - AEs in calculating
the ALP required to be made under the TNMM method.             To this extent, the
matter is restored to the file of the TPO.

7.      In the result, the appeal is allowed for statistical purposes in the terms
indicated above. Pronounced in the open court today on 25 th day of November,

Sd/xx                                                                         Sd/xx
C M Garg                                                         Pramod Kumar
(Judicial Member)                                           (Accountant Member)

New Delhi,    25 th day of November 2014
                                                                     I.T.A. No.: 962/Del/12
                                                                  Assessment year 2003-04

                                                                                 Page 4 of 4

Copies to :   (1)   The assessee                (2)   The Assessing Officer
              (3)   CIT                         (4)   CIT(A)
              (5)   Departmental Representative
              (6)   Guard File
                                                                              By order etc

                                                                      Assistant Registrar
                                                          Income Tax Appellate Tribunal
                                                             actDelhi benches, New Delhi
Home | About Us | Terms and Conditions | Contact Us
Copyright 2018 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - Contact Us

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions