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2020 (2) TMI 1668 - AT - Income TaxTP Adjustment - rejecting of the aggregation of transactions approach adopted by the assessee for benchmarking its manufacturing activities - HELD THAT:- We find that as rightly pointed by the AR the similar issue had come up before this Tribunal latest by in A.Y. 2011-12 [2018 (9) TMI 1691 - ITAT PUNE] wherein the Tribunal placing reliance in earlier orders passed in assessee’s own case upheld the aggregation approach adopted by the assessee to benchmark international transactions in manufacturing activity. We find the issue raised in ground No. 2 is similar to issue raised in A.Y. 2011-12 basing on same identical facts and no contrary order placed on record against order of ITAT, in view of the same, ground No. 2 raised by the assessee is allowed. Comparing segmental profitability of the assessee between export of AEs segment and domestic sales segment ignoring product difference, differences in markets as well as difference in the functions, assets and risks - The similar issue had come up before this Tribunal in assessee’s own case wherein the Tribunal held that TNMM is to be applied and the margins of assessee are to be compared with average margins of external comparable companies. Action of AO/TPO in excluding export incentive while computing the operating margin of the assessee in export to AEs segment - Similar issue had come up before this Tribunal in assessee’s own case for A.Y. 2011-12 [2018 (9) TMI 1691 - ITAT PUNE] wherein it has been held that export incentive is to be included as part of operating income while determining operating margin of assessee.3. In view of the above, we hold that export incentives are to be considered as operating income of assessee, while benchmarking international transactions of assessee, ground raised by the assessee is allowed. Considering PLI as operating profit to total cost as against operating profit to sales, without proving cogent reasons - HELD THAT:- The identical issue had come up before this Tribunal for A.Y. 2011-12 [2018 (9) TMI 1691 - ITAT PUNE] wherein the Co-ordinate Bench considering the earlier orders of Tribunal in assessee’s own case held the PLI of net profit to sales is to be accepted. Not granting the benefit of ± 3 percent as per proviso to section 92C(2) - HELD THAT:- We direct the AO/TPO to give benefit of range of ± 5% if the variation does not exceed the said tolerance margin, thus, ground raised by the assessee is allowed. Addition on account of management fee - HELD THAT:- We are of the opinion that the matter should be remanded to the file of AO/TPO, as the case may be, for the purpose of comparing the facts of the case and the relevant terms of agreement between the CBDT and the assessee. AO is directed to examine the facts closely and conclude the assessee on the issue of applicability of APA to the assessee's case for the year under consideration in principle. AO is also directed to consider the above cited decisions of Pune Bench of the Tribunal as well as Delhi Bench of the Tribunal for the legal proposition of deciding the issue in the light of APAs. Accordingly, the grounds raised by the assessee are allowed for statistical purposes. Disallowance of expenses u/s. 14A - HELD THAT:- We remit the issue back to the file of the Assessing Officer to adjudicate the issue in lines of the order of the Tribunal in assessee's own case for assessment year 2011- 12 [2018 (9) TMI 1691 - ITAT PUNE]. Thus, ground raised in appeal by the assessee is allowed for statistical purposes. Disallowance of deduction u/s. 35(2AB) - HELD THAT:- The Hyderabad Bench of the Hon'ble ITAT in the case of M/s. Electronics Corporation of India Ltd. [2013 (1) TMI 109 - ITAT HYDERABAD] has categorically held that is not for either the assessing authority or the appellate authority to decide on the expenditure which will be entitled to weighted deduction u/s. 35(2AB). In fact, u/s. 35(2AB) (3) if any question arises u/s. 35 as to whether and if so, what extent any activities constitutes or constituted or any asset was used for scientific research, the matter should be referred to the appropriate authority whose decision will be final. In this case the appropriate authority is the DSIR. DSIR has certified the quantum of eligible R & D expenditure for the purposes of weighted deduction u/s. 35(2AB), the figure cannot be tampered with by ITAT. Even if the assessee is right in that, there is a mistake in the certificate issued by the DSIR, which we don't know, the same can only be rectified by DSIR and not the ITAT in appellate proceedings.The details of electricity expense and legal and professional fees related to R & D unit was called for. In response, the same was submitted by the assessee. Perusal of details, the AO observed that electricity bills and legal fees does not specify that it was incurred for R & D unit only and it cannot be held that this expenditure was solely incurred for R & D unit only. Disallowance of claim of additional depreciation - HELD THAT:- As in the case of in the case of Commissioner of Income Tax Vs. Shri T.P. Textiles Pvt. Ltd. [2017 (3) TMI 739 - MADRAS HIGH COURT] and in both these cases, it has been unanimously observed and held that the assessee can claim balance depreciation in the subsequent assessment year. The Hon‟ble Bombay High Court was of the opinion that there emerges no reason to take a different view from that taken by the aforesaid two High Courts, examining the situation at considerable length. Therefore, appeal of the Revenue was dismissed by the Hon‟ble Jurisdictional High Court. Respectfully, following the binding judgment of the Hon‟ble Jurisdictional High Court, we allow ground raised by the assessee
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