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2018 (8) TMI 2070 - AT - Income TaxTP Adjustment - comparable selection - Functional differences - HELD THAT:- Companies functionally dissimilar with that of assessment need to be deselected from final list. We do not agree with the submissions of Ld. Counsel for the assessee that this Company ought to be removed from the list of comparables only on account of disclosure of 'Amalgamation' in the Annual Report being undertaken during this relevant period Benefit of capacity adjustment - Assessee is entitled to the benefit of capacity adjustment whilst benchmarking the international transaction of SIM Card Assembly. Computation of capacity adjustment - The methodology adopted by TPO/DRP in computing 'capacity adjustment' whilst only considering the depreciation, is erroneous. Recently, the issue of computation of capacity adjustment has been considered by the coordinate Bench of the Delhi Tribunal in DCIT vs. Claas India (P) Ltd [2015 (8) TMI 755 - ITAT DELHI] - the issue of computation of capacity adjustment requires reconsideration and is thus, restored to file of AO/TPO for re-computation in light of our observations in the preceding paragraph, after granting sufficient opportunity of hearing to the assessee. Allowability of working capacity adjustment - We are of the opinion that once the TPO/Ld. DRP has principally allowed the claim of working capital adjustment with respect to Software Development Segment than there is no occasion to disallow similar claim for SIM Card Assembly Segment. Now there are various guidelines and factors that have been laid down to work out the working capital adjustment and accordingly, we direct the assessee to provide the detailed working of the working capital adjustment to the TPO and he is directed to verify the correctness of the amount and the working capital adjustment as given by the assessee and allow the same in accordance with settled principles. Thus, with this direction, this issue is treated as allowed for statistical purposes. Levy of interest under section 234B - We direct the AO to verify and allow the claim of the Assessee regarding granting full credit of advance tax of ₹ 20,698,500/- paid by the Assessee and also short credit of tax deducted at source.
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