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2018 (5) TMI 2069 - AT - Income TaxTP Adjustment - Application of TNMM - computing the operating margin of the Appellant and those of the comparable companies selected for benchmarking purposes - choosing certain comparable companies despite such companies failing the legally required parameters such as, but not limited to, functional dissimilarity, quantitative filters and non-availability of data - HELD THAT:- As decided are M/S ICON CLINICAL RESEARCH INDIA PVT. LTD VERSUS THE DY. COMMISSIONER OF INCOME TAX COMPANY CIRCLE II (3) CHENNAI [2016 (9) TMI 1592 - ITAT CHENNAI] the change in the factors came about on account of drop in the capacity utilization of the assessee to 47% during the relevant assessment year - a perusal of the report of the Reserve Bank of India (RBI) clearly shows that during the assessment year 2013-14, the capacity utilization as per RBI’s report is 75%. This being so, admittedly assessee is entitled to have the benefit of capacity utilization adjustments. However, as it has been pointed out that the data in respect of capacity utilization is not available on account of non-availability of variable data, liberty is granted to the assessee to obtain the variable data and prove the claim before the TPO, who has to consider the same and grant the assessee the benefit of the adjustments towards capacity utilization. Consequently, grounds No.6 & 7 of the assessee’s appeal stands allowed. Adjustments on account of depreciation so as to determine the aggregate cash profit margins - The same is to be determined by adopting pre-depreciation figures in respect of comparables in line with the decision of Co-ordinate Bench of this Tribunal in the case of M/s.ICON Clinical Research India Pvt. Ltd. Vs. The DCIT referred to supra. Consequently, ground No.8 of the assessee stands allowed. Payments for Corporate Services availed by the assessee from its A.Es - HELD THAT:- Admittedly the business of the assessee is a consolidated one. The services referred under ‘Corporate Services” are intrinsically linked to its manufacturing and sales activity. These two services cannot be separately demarcated. Corporate services are the services rendered, which has helped the assessee in generating the business in respect of marketing and trading. This being so, in view of the decision of Hon’ble Delhi High Court in the case of CIT vs. EKL Appliances Ltd [2012 (4) TMI 346 - DELHI HIGH COURT] the ld. Assessing Officer is directed to allow the assessee’s claim of the Corporate Services expenditure incurred by assessee. Disallowance of the Sales Commission paid by the assessee to its sister concern in Bonfiglioli Deutschland GmbH (BD), Germany - HELD THAT:- Perusal of the agreement between the assessee and the Germany counterpart clearly shows that the agreement has been entered into in 2009. Consequent to the said agreement, the sales commission has been paid and the same has also been allowed during immediately preceding assessment years 2010-11, 2011-12 & 2012-13. The Revenue has not been able to bring any new fact, which has led to change the present stand for the purpose of disallowing sales commission. This has been so, we find no reason to change the existing position and the ld. Assessing Officer is directed to allow the assessee’s claim in respect of the sales commission paid to BD. In these circumstances, ground No.14 of the assessee’s appeal stands allowed Employees’ contribution to Provident Fund (PF) - HELD THAT:- As it is noticed that the issue is squarely covered by the decision of Hon’ble Madras High Court in the case of C.I.T v. Salem CoOperative Spinning Mills Ltd.[2001 (12) TMI 11 - MADRAS HIGH COURT] ld. Assessing Officer is directed to allow the assessee’s claim of payment of PF and ESI, which has been made within the grace period provided under the relevant statutes.
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