Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2020 (12) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (12) TMI 1368 - AT - Income TaxTP Adjustment - technical services segment - Comparable selection - HELD THAT:- Exclude ‘Engineers India Ltd.’ being a public sector undertaking and not comparable with the assessee. CEIL is a wholly-owned subsidiary of ‘Engineers India Ltd.’, which is a government of India undertaking. The ‘Engineer India Ltd.’ has already been held by the Tribunal as a government of India undertaking. We find that ‘Wapcos’ has been mentioned as government of India undertaking-Ministry of water resources. Similarly, Projects and Development India Ltd. is also one of the Government of India undertakings as evident from the Annual Report of the Company. The Projects and Development India Ltd. is Mini Ratna Company under the Department of Fertilizers, Government of India. In view of the above factual position, respectfully following the finding of the Tribunal in 2010-11 these companies being Government of India undertakings, are directed to be excluded from the set of the comparables. The Learned AO/TPO is accordingly directed to re-compute the transfer pricing adjustment after excluding above for companies. Adjustment for interest on receivables - TPO observed that assessee has received payment against invoices raised on Associated Enterprises after delay of substantial period, which in case of some invoices has been allowed for more than 200 days - HELD THAT:- In the case of Kusum Healthcare Private Limited [2017 (4) TMI 1254 - DELHI HIGH COURT] held that wherever working capital adjusted margin of comparables has been taken into consideration while benchmarking the main international transaction of sales to AEs, no separate adjustment on account of interest on receivable is required as same get subsumed in working capital adjustment. In the instant case, pursuant to the direction of the Learned DRP, the Learned TPO has computed mean margin of the comparables at 19.93 % , which is available on page 44 of the appeal set. This average margin has been computed using working capital adjusted OP/OC for comparable companies. Thus it is evident that in the instant case working capital adjusted margin of the comparable companies has been considered for determination of arm’s-length price of the international transaction and therefore, following the decision of the Hon’ble jurisdictional High Court (supra), no separate adjustment for interest on receivable is required. Disallowance u/s 40(a)(ia) - travelling and conveyance cost and salaries paid to the seconded employees constitute fee for technical services - HELD THAT:- As in earlier year identical expenses incurred on travel and conveyance and salary on seconded employees has not been found is liable for disallowance u/s 40(a)(ia) of the Act. This action of the Assessing Officer has not been found erroneous or fraud by the higher authorities of the Income Tax Department and, therefore, once the AO has accepted that the payments are not liable for disallowance, we do not find any reason for agitating those very payments by the Assessing Officer in the year under consideration. Accordingly, we direct the AO to delete the disallowance made under section 40(a)(ia) of the Act on payments reimbursed to foreign AEs towards travel and conveyance cost on salary cost of the seconded employees. The grounds of the appeal are accordingly allowed.
|