1. CIT Vs. CA Computer Associates India Pvt. Ltd., ITA No. 20/2011, Dated: 03/07/2012, High court of Bombay
Transferring Price: Royalty allowable on unrecovered amount of sale (Bad debt)
Section 92C provides the basis for determining the ALP in relation to international transactions. It does not either expressly or impliedly consider failure of the respondent's customers to pay for the products sold to them by the respondent to be a relevant factor in determining the ALP. Indeed in the absence of any statutory provision or the transactions being colorable bad debts on account of purchasers refusing to pay for the goods purchased by them from the assessee can never be a relevant factor while determining the ALP of the transaction between the assessee and its principal. Once it is accepted that the ALP of the royalty is justified, there can be no reduction in the value thereof on account of the assessee's customers failing to pay the assessee for the product purchased by them from the assessee. Absent a contract to the contrary, the vendor or licensor is not concerned with whether its purchaser / licensee recovers its price from its clients to which it has in turn sold / licensed such products. The two are distinct, unconnected transactions. The purchaser's / licensee's obligation to pay the consideration under its transaction with its vendor / licensor is not dependent upon its recovering the price of the products from its clients.
In the present case the transactions between the respondent and CAMI are unrelated to the transactions between the respondent and its clients i.e. purchasers of the products from the respondent. CAMI was not concerned with the respondent's inability to recover the consideration from its clients.
(Please click here for judgment)
2. ACIT Vs. GE Plastics India Ltd., ITA No. 483/Ahd/2007, Date of Pronouncement: 23/03/2012, ITAT–Ahmedabad
Non-Compete rights are an “intangible asset” eligible for depreciation
The AO’s objection that a non-compete right is not an “intangible asset” u/s. 32(1)(ii) on the ground that (a) it is not “any other business or commercial right of a similar nature” and (b) it is not capable of transfer like other intangible assets is not acceptable because (i) the right of absence of competition or the ‘non-compete right’ is an asset which is capable of being transferred and is of a similar nature as the other items referred to. This is shown by the fact that the right was transferred by the assessee at the time of its amalgamation and (ii) the expenditure resulted in the acquisition of an unrivaled and non-competed business territory for 10 years which brought advantages in the capital field. Though in Srivatsan Surveyors 125 TTJ 286 (Chennai), it was held that a restrictive covenant is a “right in persona” and not a “right in rem”, a contrary view was taken in ITO vs. Medicorp Technologies India Ltd 30 SOT 506 (Chennai). When two views are possible, the viewfavourable to the assessee should be followed held in CIT vs. Vegetable Products Ltd.88 ITR 192 (SC).
(Please click here for judgment)
III. Tender Info.:
-
National Projects Construction Corp. Ltd.
For preparation of Accounting Policies
Faridabad (Haryana)
(Click for detail)
-
Uttarakhand CAMPA
Proposals from Chartered Accountant Firms
Dehradun (Uttarakhand)
(Click for detail)
Key of Success :
"All beautiful relationships do not depend
on how well we understand someone..
but on how well we manage misunderstandings"
Thanks for your valuable time
"Voice of CA"
New User? 
Subscribe Now