Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2018 (5) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (5) TMI 1078 - AT - Income TaxTPA - Reduction of Product recall expenses of Honda Seil Car India Limited - Held that:- We concur that the assessee over and above the direct expenditure as reimbursement to the customer has other expenditure also in the form of goods lying at the factory. Infact the claim of the assessee is ₹ 13.26 crores out of which the ld Transfer Pricing Officer allowed ₹ 6.11 crores and CIT(A) enhanced the deduction to ₹ 10.72 crores. The above facts shows that there is an extraordinary event which has resulted into impacting the overall cost of the assessee. Further, with respect to the overall expenditure the certificate of the appellant shows the total cost at ₹ 10.72 crores at page No. 12 of the order of the ld CIT(A) which remains undisputed. Therefore, to this extent no infirmity can be found in the order of the ld CIT (A) in granting the above reduction. - Decided against revenue Transaction of purchases of import of goods at higher price and its resale to the principal at lower prices - Held that:- Merely because the assessee is supplying a product for a new vehicle, when assessee is in the same line of business for a long time, coupled with the fact that products have been imported from the sister concern for onward supply to the principle and later on of prices stabilized, does not make assessee to say that these cost are extra ordinary cost . It is merely a transaction of purchase and sales of goods which has resulted in to lesser profit to the assesee in its business. Assessee has also stated that it is increased cost of production only. Cost of production is the normal activity. No such disclosure is also made in the annual accounts to this effect also. This is a result of normal business risk of the assessee and hence same cannot be reduced from the total cost. Hence, the reduction granted by the ld CIT (A) of ₹ 10.73 crores is not proper. The action of ld CIT (A) is reversed and order of TPO is restored to that extent. In the result Ground no 1 of the appeal of the revenue is allowed Adjustments of the value of the inventory - Held that:- Differential prices were also calculated by applying the rates of the prouct and not identifying each of the components, which is mandatory at the time of valuation of goods. Assessee before TPO has stated that due to this profit is lowered by 0.79 %. The ld TPO has also given his reason in para no 5.3.3. of his order. He held that no such adjustment was made in Rule 10 D documentation. As the complete fact of the issue, identifying each products and its valuation and consequential shortfall and whether it is an extra ordinary items as per TP documentation is not coming out, Hence this issue is set aside to the file of the ld TPO/AO to decide afresh. Ground no 2 of the appeal is allowed for statistical purposes. Regarding capacity utilization level in the case of the assessee as well as the comparable company, we do not find any infirmity in the order of the ld CIT (A) who allowed it only with respect to depreciation. Hence, Ground no 3 is dismissed.
|