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2019 (6) TMI 538 - AT - Income TaxRectification u/s 154 - incorrect computation of margin of the comparables - difference in the rate of depreciation between itself and the comparables - TP Adjustment - adjustment made to the arm's length price of the import of capital assets - HELD THAT:- The assessee had never raised the issue of difference in the rate of depreciation between itself and the comparables either before the TPO or before learned DRP. Though, we find substantial force in the submissions made on behalf of the assessee, however, since the aforesaid contention was raised for the first time before us, we are inclined to restore the issue to the Assessing Officer for considering assessee’s claim of depreciation adjustment after verifying the rate at which the assessee and the comparables have claimed depreciation and keeping in view the ratio laid down in the decision of the Tribunal, Delhi Bench, in Honda Motorcycle & Scooters India Pvt. Ltd. [2015 (4) TMI 502 - ITAT DELHI] As regards assessee’s claim of incorrect computation of its margin by treating certain non–operating expenses as operating in nature as well as assessee’s contention that margin of the comparables have been computed wrongly, we are of the view that the TPO was not justified in rejecting assessee’s application filed u/s 154 on the ground that they are not in the nature of mistake apparent on the face of record. In our view, aforesaid decision of the TPO is unacceptable. Moreover, the issue relating to the incorrect computation of margin of the comparables constitutes a mistake apparent on the face of record. Therefore, we direct the TPO to dispose of the application filed by the assessee u/s 154 on merits by correctly computing the margin of the assessee and the comparables. TP adjustment - ALP of management service charges - HELD THAT:- Arm's length price of an international taxation has to be determined not only with reference to the stated income and expenditure but also by applying any one of the methods prescribed under section 92C - TPO has not stated, by adopting which method he has determined the arm's length price of management service charges at nil. Though the assessee had furnished a number of evidences before learned DRP by way of additional evidences, learned DRP has neither examined them at their level nor the TPO has examined them properly in the course of remand. In any case of the matter, as per the statutory mandate the duty of the TPO is to determine the arm's length price of the international transaction by applying any one of the prescribed methods as per section 92C. The Transfer Pricing Officer has failed to do so in the present case. Therefore, restore the issue to AO/TPO to properly examine the benchmarking of the assessee and all other documentary evidences furnished by the assessee and if they are not satisfied with assessee’s benchmarking, they may determine the arm's length price by applying any of the prescribed methods. Not allowing assessee’s claim of set–off of brought forward business loss - HELD THAT:- in the draft assessment order has allowed set–off of brought forward loss along with unabsorbed depreciation. However, in the final assessment order, the Assessing Officer has omitted to allow set–off of brought forward business loss without any valid reason. In view of the aforesaid, we direct the Assessing Officer to allow assessee’s claim of brought forward business loss and after set–off of such brought forward business loss may set–off the unabsorbed depreciation of prior years. Grounds are allowed.
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