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Ground of appeal raised by the assessee are that on the facts and in the circumstances of the case and on the law prevailing on the subject, the learned AO/TPO, pursuant to the directions of the Hon’ble DRP, has erred in making a TP adjustment of INR 7,95,78,453 to the value of international transactions by modifying the benchmarking methodology adopted by the appellant and concluding that certain international transactions of the appellant do not meet the arm’s length test. The learned AO has also erred in disallowing depreciation of INR 64,09,577 on the assets installed at the premises of the appellant’s customers, by holding that the same were not used for the purpose of its own business.

Shanti Prime Publication Pvt. Ltd.

Sec. 4 of Income Tax Act, 1961— Income—Capital or revenue receipt - Voluntary payments made by parent company to its loss making Indian company can be understood to be payments made in order to protect the capital investment of assessee-company and thus capital in nature.

Facts: The issue arising by way of ground of appeal is against treatment of subvention/subsidy received by assessee from its parent company Nalco, USA.

Held, that assessee was a subsidiary of Nalco, USA and since it was incurring losses, the parent company allowed promotional allowance to prevent the assessee from becoming sick company. The assessee received a sum towards subvention. The assessee had offered the said amount as taxable in its hands initially but before the DRP, it was pleaded that the same was not taxable in its hands. The issue vis-à-vis its taxability i.e., receipt of subvention from parent company now stands settled by recent decision of Hon’ble Supreme Court in Siemens Public Communication Network (P) Ltd. vs. CIT (supra). The Hon’ble Supreme Court had held that voluntary payments made by parent company to its loss making Indian company can also be understood to be payments made in order to protect the capital investment of assessee-company. It was further held that if that is so, then the payment in question could not be held to be revenue receipts, hence they were capital receipts in the hands of assessee. Applying the said proposition to the facts of present case, where the assessee had received the alleged subvention amount or the subsidy as referred to by the AO/TPO/DRP, the amount received by assessee from its parent company Nalco, USA was a capital receipt in the hands of assessee and hence, was not taxable in its hands. - NALCO WATER INDIA LTD. V/s ASSTT. CIT - [2020] 205 TTJ 380 (ITAT-PUNE)

Ground of appeal raised by the assessee are that on the facts and in the circumstances of the case and on the law prevailing on the subject, the learned AO/TPO, pursuant to the directions of the Hon’ble DRP, has erred in making a TP adjustment of INR 7,95,78,453 to the value of international transactions by modifying the benchmarking methodology adopted by the appellant and concluding that certain international transactions of the appellant do not meet the arm’s length test. The learned AO has also erred in disallowing depreciation of INR 64,09,577 on the assets installed at the premises of the appellant’s customers, by holding that the same were not used for the purpose of its own business.

Shanti Prime Publication Pvt. Ltd.

Facts: The issue arising by way of ground of appeal is against treatment of subvention/subsidy received by assessee from its parent company Nalco, USA.