Shell Global Solutions International BV vs. DDIT (ITAT
Ahmedabad)
Interplay between
Article 9 of the DTAA and Transfer Pricing law in the Act explained. While
Article 9 is an enabling provision, the TP mechanism under the domestic law is
the machinery provision. There is no occasion to read Article 9 as confined to
enabling ALP adjustment in respect of only domestic entities. The mere fact
that the OECD Commentary etc give examples related to economic double taxation
situations does not imply that the Article 9 (1) cannot be applied to other
situations Once it is not in dispute that the arms length standards are, therefore, to be applied in computation of taxable profits, as is specific mandate of article 9, it is only axiomatic that the manner in which arm’s length standards are to be applied is something which has not been defined by the treaties and the mechanism provided under the domestic law, therefore, must hold good. Article 9(1) does not, and cannot, provide the basis of the ALP adjustments as tax treaties restrict application of domestic law of taxation rather than create independent rights of taxation. Article 9(1) is thus, in a way, an enabling provision, and the TP mechanism under the domestic law is the machinery provision. The provisions of article 9(1) permit ALP adjustment in all situations in which the arm’s length standards require higher profits in the hands of any “one of the enterprises, but by reason of those conditions, have not so accrued” to be “included in the profits of that enterprise and taxed accordingly”. The provisions are clear and unambiguous. There is no occasion to read this provision as confined to enabling ALP adjustment in respect of only domestic entities
Reliance Communications Ltd vs. DDIT (ITAT Mumbai)
Taxability of
software license fees as royalty: Non-consideration of the verdict of the
Tribunal in Solid Works Corporation (51 SOT 34) and misreading of the Delhi
High Court's verdict in Ericsson AB constitutes a mistake apparent from the
record u/s 254(2) and the orders have to be recalled In the instant appeals, the Tribunal admittedly did not consider the decision rendered by co-ordinate bench in the case of Solid Works Corporation (supra), even though it was relied upon by the assessees herein. The assessees have contended that the non-consideration of the decision of co-ordinate bench, when it was specifically relied upon by the assessee would result in a mistake apparent from record and would warrant recall of the order. In support of this contention, the assessees have placed their reliance on the decision rendered by Hon’ble Supreme Court in the case of Honda Siel Power Products Ltd (supra), wherein the Hon’ble Apex Court has held that the Tribunal was justified in exercising its power u/s 254(2) when it was pointed out to the Tribunal that the judgement of co-ordinate bench was placed before the Tribunal when the original order came to be passed but it had committed a mistake in not considering the material which was already on record
Krishna Enterprises vs. ACIT (ITAT Mumbai)
S. 50C: If the
difference between the sale consideration of the property shown by the assessee
and the FMV determined by the DVO u/s 50C(2) is less than 10%, the AO is not
justified in substituting the value determined by the DVO for the sale
consideration disclosed by the assessee. Unregistered sale agreements prior to
01.10.2009 are not subject to s. 50C as per CBDT Circular No.5/10 dated
03.06.2010 We are also inclined to agree with learned AR Mr. Shashank Dandu that in view of the decision of Co-ordinate Bench in case of Rahul Constructions vs. DCIT (Pune) (Trib.) 38 DTR 19 (2010) ITA No.1543/Pn/2007 since the difference between the sale consideration of the property shown by the assessee and the FMV determined by the DVO under Section 50C(2) being less than 10 per cent, AO was not justified in substituting the value determined by the DVO for the sale consideration disclosed by the assessee
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