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2014 (9) TMI 1221 - AT - Income TaxTP Adjustment - international transaction - computation of ALP on the basis of RoCE method - HELD THAT:- Tribunal cannot be taken as an authority in which it can be said that either Tribunal did not accept the decisions relied upon by Ld. AR of the assessee or a different proposition has been laid down as has been canvassed by the Ld. AR of the assessee. Therefore, the decisions relied upon by Ld. AR would be applicable to the facts of the present case. Thus, table No. 2 reproduced in para 3.2 will be applicable and operating profit @ 3.81% of Total Cost relating to international transaction would be a sum of ₹ 36,36,787/- and if the same is added and reduced to the extent of 5% from the international transaction of ₹ 9,59,06,519/- then the-5% would be a sum of ₹ 9,11,11,193/- and +5% would be a sum of ₹ 10,07,01,845/-, which would be within either of the above figures as the ALP of the international transaction would be a sum of ₹ 9,90,90,510/- (₹ 59,59,06,519 + ₹ 36,36,787/-). Even otherwise if the operating expenses are taken at entity level and operating profit is determined for ALP at entity level then ALP of the total sales would be a sum of ₹ 52,76,94,805/- as described in table-1 in para-3.2 reproduced above and the same would also fall within the safe harbour of ₹ 48,29,94,843/- and ₹ 53,38,36,405/-. Therefore, in both the circumstances the adjustment if counted only on international transactions of the assessee with its AE, then ALP would fall within safe harbour of +/- 5% and no adjustment would be called for. Accordingly, we order to delete the addition and Ground No. 1 is allowed. Addition to deemed dividend u/s 2(22)(e) - HELD THAT:- If consolidated account is taken into consideration then on 4/07/2007 and on 29/3/2008 the credit balance of the assessee with Dinurje was much more than the amount obtained by the assessee. Therefore, it cannot be said that any withdrawal made by the assessee from Dinurje could represent as loan or advance within the meaning of section 2(22)(e) of the Act. The reason given by Ld. CIT(A) is also without appreciating the full facts of the case as even after drawing those amounts and giving effect to the trade transactions, the balance, in the accounts of the assessee with Dinurje, was in surplus. The withdrawal made by the assessee from her own credit balance cannot be treated as loan or advance within the meaning of section 2(22)(e). Moreover, the payee company is maintaining one consolidated account of the assessee. Therefore, the sustenance of addition is not justified at all and is not conformity with the provisions of section 2(22)(e) - Decided in favour of assessee. Loan or advances given by Dinurje to M/s. Ace Divine Jewellery Pvt. Ltd. (in short Ace Divine), the assessee is a substantial share holder of both these concerns having around 70% share of both the concerns - Applying section 2(22)(e) of the Act this addition has been made in the hands of the assessee.In the present case the amount has rightly been taxed in the hands of the assessee who is substantial share holder of both the concerns and that is in accordance with the decision of ANKITECH PVT LTD. & OTHERS [2011 (5) TMI 325 - DELHI HIGH COURT]. Therefore, addition made under section 2(22)(e) to the extent of ₹ 1,48,37,352/- is up and Ground No. 2 of the assessee is partly allowed.
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