Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2015 (5) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2015 (5) TMI 1027 - AT - Income TaxDisallowance u/s 14A - CIT(A) restricted part disallowance - Held that:- In the present case, the entire investment has been made by the assessee in the subsidiary company, therefore, it is not a case of reshuffling investment of portfolio by the assessee which requires the involvement of the management in the regular decision making process. It appears that this is a strategic investment and further does not require regular e–valuation and re–consideration of retaining or reshuffling of the investment. Further, we find that the estimate of disallowance on account of general administrative expenses made by the learned CIT(A) at ₹ 5,00,000, is within the range of 1% to 2% of the exempt income which is found to be reasonable keeping in view of the fact of the case that the entire investment had been made by the assessee in the subsidiary company. Accordingly, we do not find any error or infirmity in the order of the learned CIT(A) qua the present issue. - Decided against revenue Transfer pricing adjustment - clubbing of results of three group companies of Suzlon for the purpose of determining the arm's length price - Held that:- Suzlon Energy Ltd. was engaged in the activities of supply alone whereas the assessee is in the business of supply, installation, commissioning as well as development of sites. Thus, it is clear that the business activities carried out by the assessee are not comparable with the Suzlon Energy Ltd., for the purpose of determination of arm's length price. The Transfer Pricing Officer included the Suzlon Energy Ltd. in the computation of arm's length price, however, in view of the fact that the Suzlon Energy Ltd. is not a functional comparable to the assessee, therefore, the inclusion of Suzlon Energy Ltd. in the list of comparable is not proper. The learned CIT(A) accepted the objection of the assessee that Suzlon Energy Ltd. alone is not a good comparison of the assessee and, therefore, clubbed the margins of all the three companies. Further, we note that the Transfer Pricing Officer has determined the arm's length price at 13.39% in the comparison to the operating margin of the assessee @ 11.57%. However, the Transfer Pricing Officer has not given the benefit of tolerance range of + 5% while making the adjustment. Without going into the controversy whether the learned CIT(A) is justified in taking the consolidated results of three group companies of Suzlon, we note that when the Suzlon Energy Ltd. is not a comparable and, therefore, cannot be included in the set of comparables for the purpose of determination of arm's length price and further the arm's length price determined by the Transfer Pricing Officer is within the tolerance range of 5%, then the clubbing of results of three group companies by the learned CIT(A) would be inconsequential . - Decided against revenueTherefore, in view of the above facts and circumstances of the case, we do not find any reason to interfere with the order of the learned CIT(A) qua this issue when the action of the Transfer Pricing Officer including Suzlon Energy Ltd. in the list of comparable is not sustainable. - Decided against revenue
|