The case titled ‘JCB India Ltd. vs DCIT’ revolves around an appeal against the Deputy Commissioner of Income Tax (DCIT), Circle-13(2), New Delhi’s assessment order concerning the determination of the arm’s length price (ALP) of royalty payments made by JCB India Ltd. to its Associated Enterprises (AEs) for the assessment year 2014-15. The primary issue is the validity of the orders passed under Section 263 of the Income Tax Act, 1961 (the Act) by the Principal Commissioner of Income Tax (PCIT), which the appellant contends are erroneous and prejudicial to the interest of revenue. The final tribunal order was pronounced on 19 January 2022.
Case Number: ITA 518/DEL/2021
Appellant: JCB India Ltd., New Delhi
Respondent: DCIT, Circle-13(2), New Delhi
Assessment Year: 2014-15
Case Filed On: 2021-05-17
Order Type: Final Tribunal Order
Date of Order: 2022-01-19
Pronounced On: 2022-01-19
Judges: G.S. Pannu, Hon’ble President, and Saktijit Dey, Judicial Member
The appeal was filed by JCB India Ltd. against the PCIT’s order dated 05.03.2021, directing the AO to re-examine the arm’s length nature of royalty payments for models other than the 3DX model. The appellant argued that the PCIT’s directive was invalid as the TPO had already determined the ALP of the royalty payments, and the AO had no option but to follow the TPO’s determination.
The appellant raised several grounds challenging the PCIT’s directive, including:
The case centered on whether the royalty payments made by JCB India Ltd. to its AEs for models other than the 3DX model were at arm’s length. The TPO had determined the ALP of the royalty payments for the 3DX model at 2% instead of the claimed 5%, but accepted the royalty payments for other models. The PCIT, however, directed the AO to re-examine the royalty payments for all models, not just the 3DX model, arguing that the TPO had not adequately examined these payments.
The tribunal examined the facts and legal provisions under Sections 263 and 92CA of the Act. It noted that the AO had complied with the statutory mandate by incorporating the TPO’s adjustments in the assessment order. The tribunal emphasized that the PCIT had no jurisdiction to revise the TPO’s order under Section 263 and that the assessment order could not be considered erroneous when it was passed in conformity with the TPO’s determinations.
The tribunal set aside the PCIT’s order dated 05.03.2021, directing the AO to re-examine the royalty payments for models other than the 3DX model, and restored the original assessment order dated 29.11.2018. The appeal was allowed in favor of the appellant.
Order pronounced in the open court on 19 January 2022.
Sd/- (G.S. Pannu) PRESIDENT
Sd/- (Saktijit Dey) JUDICIAL MEMBER
Delhi; Dated: 19 January 2022.
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR
Asst. Registrar, ITAT, New Delhi.
Date of dictation: 21.12.2021
Date on which the typed draft is placed before the dictating member: 18.01.2022
Date on which the typed draft is placed before the other member: 18.01.2022
Date on which the approved draft comes to the Sr. PS/PS: 19.01.2022
Date on which the fair order is placed before the dictating member for pronouncement: 19.01.2022
Date on which the fair order comes back to the Sr. PS/PS: 19.01.2022
Date on which the final order is uploaded on the website of ITAT: 19.01.2022
Date on which the file goes to the Bench Clerk: 19.01.2022
Date on which the file goes to the Head Clerk: 19.01.2022
The date on which the file goes to the Assistant Registrar for signature on the order: 19.01.2022
Date of dispatch of the order: 19.01.2022.
JCB India Ltd. vs DCIT – ITA 518/DEL/2021: Royalty Payment Dispute
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