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2017 (12) TMI 259 - AT - Income TaxTransfer Pricing adjustment - interest on the advances paid - Held that:- As the issue under consideration is materially identical to that of AY 2011-12, following the decision of the coordinate bench in that year considering that the assessee has already received 6.37% interest which is more than the Singapore prime lending rate of 5.38%. We delete the addition made on this count. At the same time, the DRP has confirmed the addition simply because the assessee has not submitted information before AO. It was represented before DRP, DRP has to find out the real transaction & appropriate ALP adjustment based on the information available at their disposal. In case it is not, then, they can call for remand report from TPO. It is not proper to confirm the ALP adjustment without proper verification. In the same breath, we also condemn the action of the assessee in not properly submitting the required information to lower authorities. In case of inability to submit the information before lower authorities, they could have recorded the same before the authorities instead of maintaining silence. Transfer pricing adjustment towards corporate guarantee - Held that:- As the issue under consideration is materially identical to that of AY 2011-12, following the decision therein, we direct the AO/TPO to fix the fees at 0.27% as guarantee commission on the amount involved. Accordingly, the grounds raised by the assessee are partly allowed. Adjustment in respect of international transaction of interest on mobilization advances - Held that:- As the issue under consideration is materially identical to that of AY 2011-12, following the decision therein, we allow the grounds raised by the assessee on this issue and accordingly interest charged on mobilization advances are deleted. As in previous year held that when the whole work contract is considered within the ALP, we are of the opinion that the advances given in the course of contract does not call for special adjustment. Moreover, these business advances cannot be categorized as ‘loans and advances’ so as to consider them for adjustment. Relying on the various case law relied upon by the Ld. Counsel, we are of the opinion that since assessee-company is not charging any interest from the AEs and non-AEs and also not paying any interest on the amounts received by it from the main contractor, this adjustment is not warranted. TPA - selection of JEP Holdings as comparables - Held that:- As this comparable company is consistently making losses over the periods stated above, as held in the case of Bobst India Pvt. Ltd., (supra), the coordinate bench of Pune held that the company making persistent loss for the past three years is not good comparable. So, the same should be excluded for computing operating margin of comparable companies for arriving at ALP in relation to international transaction. Accordingly, we direct the TPO to eliminate this comparable and determine the ALP afresh. The fresh result may be considered for ALP adjustment by removing the above from comparables, in case the final ALP is within the +/- 5% range, claim of the assessee may be accepted. Addition on account of sub-contract expenses - Held that:- As the issue under consideration is materially identical to that of AY 2011-12, following the decision therein, AO is directed to accept the sub contract payments, as assessee received the corresponding amounts from main contractor and offered the same for taxation. following the principles laid down by the Coordinate benches, AO is directed to disallow only a certain percentage of the above amount, if necessary. The addition made is accordingly deleted and the issue of examination of impugned sub contract payments is restored to AO to consider afresh as directed Disallowance of loss on account of foreign exchange fluctuation - Held that:- We remit this issue back to the file of AO to consider the submissions of the assessee and allow the claim on the basis of I.T. provisions.
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