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2022 (2) TMI 1361 - ITAT DELHITP Adjustment - depreciation adjustment was rejected by the DRP - HELD THAT:- In the case of the Honda Motor Cycle and Scooter India Pvt. Ltd. [2015 (4) TMI 502 - ITAT DELHI] it was held that where there was difference in rates of depreciation charged by comparables viz-a-viz assessee suitable adjustment was to be made to profits of comparables. As relying on EXL SERVICE. COM (INDIA) PVT. LTD. [2014 (12) TMI 894 - ITAT DELHI] and M/S SUMI MOTHERSON INNOVATIVE ENGINEERING LTD. [2014 (2) TMI 652 - ITAT DELHI]TPO has rightly allowed the adjustment for depreciation on assets. Thus, we reverse the findings of the DRP on this issue and direct the TPO/AO to restore the depreciation adjustments on assets which was earlier allowed while passing the order u/s 92CA. Comparable selection - TPO included Uniklinger Ltd. and Talbros Automotive Components Ltd. as comparables - Uniklinger Ltd. - As in the segment reporting the company stated that it is in the business of manufacturing and sale of fluid control products and fluid seeling products. Therefore, it is abundantly clear from the annual report of this company that this company namely Uniklinger is not engaged in the automotive industry and has a completely different product profile. Therefore, we are of the view that this company is functionally not comparable to the assessee and, therefore, we direct the TPO to exclude this company from comparables. Talbros Automobile Ltd. - Comparable company entering into joint venture agreement and also transferring its assets to the JV Company it can be viewed that there is an extraordinary event has taken place. Further there are no segmental accounts available to establish separately the profitability from manufacturing of auto components and rendering of IT Services. In the circumstances this company cannot be considered as comparable company and accordingly, we direct the TPO to exclude this company from the comparables. TPO excluded KMA Auto Components P. Ltd. and ANU Industries Ltd. from the list of comparable companies for the reason that annual reports/P&L Accounts are not available - TPO should re-examine these two comparables viz-a-viz the annual reports and give a fresh look into these comparables and decide afresh as to whether these two comparables selected by the assessee can be considered as comparable companies. Thus, we restore these grounds to the file of the TPO. Working capital adjustment - We direct the TPO to examine the contentions of the assessee and to provide the details of working capital computations and after giving adequate opportunity to the assessee to carry out the directions of the DRP for granting working capital adjustment. We order accordingly. Grounds are allowed for statistical purpose. Allowability of R&D Cess as an admissible expense - We direct the AO to carry out the DRP directions and allow R&D cess as an admissible expense and compute the income accordingly. This ground is allowed for statistical purpose.
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