Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2018 (8) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (8) TMI 2021 - ITAT DELHITP Adjustment - comparability - HELD THAT:- It is pertinent to note that the Assessee for A.Y. 2010-11 has not argued the comparables before us but only submitted the chart to that extent and submitted that the same should be considered according to the directions given by the Tribunal for A.Y. 2010-11[2017 (9) TMI 103 - ITAT DELHI]. From the records or from the arguments, the Ld. AR has not made out clear similarities between the E-Valueserve SEZ (Gurgaon) P. Ltd. and the assessee company i.e. Evaluserve.com Pvt. Ltd. The same was not done by the TPO about the similarities between the sister concern and the assessee company. Therefore, if there is similarity between the two entities then these comparables has to be considered by the TPO/AO as per the written chart submitted before us. Otherwise, the same should be looked into afresh by the TPO and if all comparables are qualifying all the filters set out by the TPO/AO, then same should be included in the final list. Therefore, this issue is remanded back entirely to the file of the TPO for fresh adjudication after taking into consideration the functional profile of the assessee company and the comparables as well as taking into account the decision of the Tribunal in case of sister concern. Calculating the PLI of the comparables - Export filter (excluding companies having export less than 75% of total income) adopted by the TPO is a reasonable filter as the assessee earns predominantly from exports and thus its business model is different from the companies earning in domestic market - HELD THAT:- TPO has taken 'miscellaneous income’ as operating in nature. As per the Ld. AR’s submission in the absence of details and nature of ‘miscellaneous income’ received by comparables, it should not be taken to be an operating item. This is mentioned in TPO’s order itself wherein calculations of PLI of comparables is stated. Hence, the Ld. AR submitted that ‘miscellaneous income’ should be non-operating as details are not known. Prima facie this appears to be true, but the TPO/AO has not made any effort to look upon this aspect. Therefore, it will be appropriate to remand back this issue to the file of the TPO/Assessing Officer for fresh adjudication. We therefore restore this issue to the file of the A.O/TPO for fresh adjudication of the issue after giving due opportunity of being herd to the assessee. Provision for doubtful debt - HELD THAT:- It is pertinent to note that the TPO himself while calculating PLI of comparables has taken donation and provision for doubtful debt to be non operating in nature. The TPO has not made out the interlink between the donations and provisions for doubtful debt while concluding that it is operating in nature. No direct connectivity was made out by the TPO while arriving at the said conclusion. Therefore, the order of the TPO/AO is not sustainable on this account while making additions to that extent. Ground of the Assessee’s appeal is allowed. Re-calculating Assessee’s PLI from 20.17% to 16.17% - HELD THAT:- DRP observed that the evidence was not produced. But according to the Ld. AR, all evidences/bills/details/correspondence were produced. Since the evidences have not been verified by the revenue authorities, therefore, it will be appropriate to remand back this issue to the file of the TPO/AO for adjudicating the issue in the right of all the evidences produced by the assessee and after taking the same into consideration, decide the issue as per fact and law. Needless to the say, the assessee be given the opportunity of hearing by following principles of natural justice. Deduction under Section 10A as allowable after setting off brought forward losses of the previous years - HELD THAT:- As decided in M/S YOKOGAWA INDIA LTD. [2016 (12) TMI 881 - SUPREME COURT] aggregate of the incomes under other heads and the provisions for set off and carry forward contained in Sections 70, 72 and 74 of the Act would be premature for application. The deductions under Section 10A therefore would be prior to the commencement of the exercise to be undertaken under Chapter VI of the Act for arriving at the total income of the assessee from the gross total income. The expression “total income of the assessee” in Section 10A has to be understood as ‘total income of the undertaking’. Thus, there was no motive of the assessee to divert the profit of the assessee company. Therefore, Ground No. 9 is allowed. Addition on account of disallowance of prior period expenses - HELD THAT:- DRP while giving directions has given relief on disallowance of prior period expense. However, this addition has not been deleted by the Assessing Officer. Therefore, we direct the Assessing Officer to delete this addition as per the directions given by the DRP. Brought forward losses and unabsorbed depreciation - HELD THAT:- It is pertinent to note that from the records it appears that brought forward losses and unabsorbed depreciation have already been adjusted in the last year i.e. 2007-08, but the Assessing Officer has not taken into consideration the same. Therefore, it will be appropriate to remand back this issue to the file of the Assessing Officer to verify the brought forward losses and unabsorbed depreciation which was adjusted in the earlier year and make the additions as per the facts of the case and the law. Needless to say, the assessee be given opportunity of hearing by following principles of natural justice.
|