Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2017 (5) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2017 (5) TMI 1735 - ITAT DELHITP Adjustment - Determination of arm's length price of international transaction of provision of infrastructure support services - comparability analysis of the assessee‟s international transaction with an uncontrolled transaction - HELD THAT:- BNR Udyog Limited, it is carrying on medical transcription, construction, and financial activities. It is also the member of the National commodities and derivatives exchange Ltd and multi commodity exchange of India. This company has assumed geographical risk, human resources risk as well as foreign exchange risk. On looking at the functional profile of the assessee company with respect to integrated support service agreement, services, which are the necessary for the day to day operations of the service recipients business, are provided. The natures of services are also described in the order of TPO . The above services do not envisage employment of highly qualified professionals such as doctors, but operates as back-office functions. Therefore, there is a functional differentiation in the activities of the comparable vis-à-vis services of appellant assessee, hence, specific characteristics of the property transferred and functional profile according to us differs. Therefore, this comparable deserves to be rejected from comparability analysis. Cross domain solutions private limited - Looking to the functional profile of the comparable company as made available in judicial precedents for the same AY , this comparable is held to be KPO and the functional profile of the assessee with respect to the infrastructure support services do not lead to such a conclusion that it is also a KPO. Therefore, based on incomplete information, we direct the Ld. Transfer Pricing Officer to exclude this comparable from the comparability analysis. Deduction u/s 10 A - allocation of common expenditure for working out deduction - whether the allocation key should be turnover as applied by the ld AO or they should be specific to the nature of the expenditure incurred, as applied by assessee, as stated before us? - HELD THAT:- Turnover is a general allocation key, which can be employed in the end only after testing specific allocation keys, such as for salary and wages, etc, the man hours devoted, for travelling purposes wise, etc. TPO has adopted the turnover as the allocation key, which we reject because we are of the opinion that allocation key should be specific with respect to the nature of expenditure incurred. As per page No. 432 of the paper book it is not clear what kind of allocation key has been used by the assessee for the purpose of allocation of expenditure - assessee was not asked during the course of assessment proceedings that how the allocation of expenditure have been made as according to the assessee this issue has not been raised and additional evidence submitted before the Ld. dispute resolution panel were also not considered due to paucity of time. In view of this we set aside the issue of verification of allocation key with respect to allocation of expenditure to the file of the Ld. Assessing Officer and then to determine the profit derived by the eligible undertaking for working out deduction under section 10 A. Disallowance of provision for product support and services (i.e. provision for warranty) - Addition on the basis that the said expenditure is in the nature of unascertained liability - HELD THAT:- This issue is squarely covered by the decision of the coordinate bench in assessee‟s own case for the previous year for assessment year 2008 – 09 wherein coordinate bench has set aside the issue back to the file of the Ld. Assessing Officer for verifying the provision in view of the decision in case of Rotork controls India private limited [2009 (5) TMI 16 - SUPREME COURT]. In view of this, we also set aside this ground of appeal to the file of the Ld. Assessing Officer to decide accordingly. Disallowance of depreciation on fixed assets acquired by the appellant from NCR Corporation India private limited - HELD THAT:- In view of the decision of the coordinate bench in the assessee‟s own case for assessment year 2008 – 09, we also set aside this ground of appeal of the assessee to the file of the Ld. assessing officer, as the depreciation will always depend upon the written down value of the assets in earlier year.
|