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2014 (1) TMI 1130 - AT - Income TaxTransfer pricing adjustment - Held that:- Following Sony India Pvt. Ltd. vs. CBDT [2006 (10) TMI 88 - DELHI HIGH COURT] - The expression "having regard to" in Section 92C(4) and 92CA(4) enables the AO to consider not only the report of the TPO but any other material that may be placed before him by the assessee to arrive at a different conclusion - The report of the TPO is not binding on the AO - The Assessing Officer is not bound to accept the ALP as determined by the TPO but has to determine the ALP, only after giving an opportunity of hearing to the assessee. In this case, admittedly no such opportunity has been given in terms of sub-section 4 of section 92C read with section 92CA - The issue has been restored for fresh adjudication. Transfer pricing adjustment for A.Y. 2005-06 - Held that:- The TPO has taken into consideration the figure of foreign exchange gain, which was not there in the A.Y.2005-06 - The assessee's explanations for the A.Y. 2005-06 and all its objections and documents have not been considered at all - This shows that the ld. TPO has passed the order without application of mind, which he is required to do so under the provisions of law and equity - Such an order shows an unprecedented bias and pre-determined mind without going into the merits of the case - The issue has been restored for fresh adjudication. Validity of the assessment order passed under section 143(3) r.w.s. 144C(13) Held that:- Following Commissioner of Income-Tax Versus Bhan Textiles P. Limited. [2006 (9) TMI 129 - DELHI High Court] As per The Central Board of Direct Taxes Circular No.549, dated October 31, 1989 - A proviso to sub-section (2) provides that a notice under the sub-section can be served on the assessee only during the financial year in which the return is furnished or within six months from the end of the month in which the return is furnished, whichever is later - The Department must serve the said notice on the assessee within this period, if a case is picked up for scrutiny - It follows that if an assessee, after furnishing the return of income does not receive a notice under section 143(2) from the Department within the aforesaid period, he can take it that the return filed by him has become final and no scrutiny proceedings are to be started in respect of that return - The impugned assessment order passed by the Assessing Officer is void ab initio as the same has been passed without the mandatory requirement of serving the notice under section 143(2) upon the assessee within the time provided in the second proviso Decided in favour of assessee. Transfer pricing adjustment in respect of marketing services provided Held that:- The TPO has not examined properly the assessee's contention and submissions made before him -How the comparables selected by the assessee were functionally different and how the TPO has selected his own comparables and bench marked the margin The TPO has not properly appreciated the entire marketing expenditure which has been reimbursed by the A.E. - The principal agreement has not been filed before the Tribunal - Even the manner in which the operating income has been shown has not been properly clarified as to whether it forms part of the income or it is a compensation received from the A.E. - The issue has been restored for fresh adjudication keeping in view the principal agreement and all other documents filed by the assessee. Disallowance on account of AIR information Held that:- The details of information have not been provided to the assessee - The assessee has not been given opportunity to examine this information and make proper submissions - The issue has been restored for fresh adjudication. Disallowance of set- off of brought forward unabsorbed business loss Held that:- Following General Motors India Pvt. Ltd. v/s DICT [2012 (8) TMI 714 - GUJARAT HIGH COURT] - The amendment in section 32 is applicable from the assessment year 2002-03 and subsequent years and unabsorbed depreciation available in the earlier years will be allowed to be carried forward to the succeeding years and if any unabsorbed depreciation or part thereof could not be set-off till the assessment year 2002-03, then it would be carried forward till the time it is set-off against the profits and gains of subsequent years - The issue has been restored for fresh adjudication in the light of aforesaid judgement.
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