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2021 (7) TMI 36 - AT - Income TaxTP Adjustment - multiple year data used - HELD THAT:- We direct the ld. TPO to verify the PLI of comparables and assessee by using the current year's data and then work out the ALP of the international transaction. Accordingly, ground No. 3.2 of appeal of the assessee is allowed with above direction. Grant capacity realization adjustment carried out by the assessee with respect to the personnel cost being the first year of operation - Assessee submitted that it has not claimed any ad-hoc adjustment of 37% as claimed by the ld. DRP, but has explained the basis of computation of each of the specific adjustment made with respect to import duty, personnel cost, and depreciation demonstrated - HELD THAT:- Capacity utilization adjustment carried out by the assessee in respect of personnel cost being the first year of operation has not been granted by the lower authorities, we hold that as assessee has submitted complete details of the employees stating their name, designation, experience, educational qualification, role and responsibility and the amount of salary paid, more particularly when there is a disproportionate difference between the salary expenditure incurred by the comparable companies with the salary expenditure of the assessee and there are seconded employees who are necessarily deputed to the assessee for the purpose of development of the business, the claim the assessee needs to be re-examined with the details furnished. This is more so when learned dispute resolution panel accepted that there is a higher depreciation claim in the case of assessee compared to the comparable companies - we set aside ground back to the file of the learned transfer pricing officer with a direction to examine the claim of the assessee that those expenditure on salary of the employees who are working for the development of the business and not for earning the operating profit for the year requires proper adjustment. Import duty adjustment carried out by the assessee on account of huge difference in import duty cost of the assessee as well as of the comparable should also be eliminated from the operating expenses of the assessee - We hold that as necessary consumption of the material is only booked in the profit and loss account for which the materials are imported for onward sale/manufacturing whose revenue has been booked in the profit and loss account, the above adjustment cannot be granted. This is so for the reason that the duty structure of the material imported by the assessee and the sale price of the assessee takes into consideration all these commercial aspects of the trading or operation of the business of the assessee. Naturally, if the import duty factor (rate) is higher when raw materials imported by the assessee naturally the sale price will reflect the recovery of those import duty also from the buyers. Adjustment on account of transfer pricing if any be made only proportionate to the value of control transactions in case of the assessee - HELD THAT:- Issue decided in favour of the assessee that transfer pricing adjustment if any should be made only proportionate to the value of controlled transaction in case of the assessee. In view of the identical issue decided in favour of the assessee in assessee's own case for earlier years, we direct the learned assessing officer accordingly. We allow ground number 4 of the appeal Disallowance of provision for doubtful debts u/s. 37 - claim of the assessee is that the above sum is a bad debt only and not provision for doubtful debts - HELD THAT:- We find that assessee did raise such an objection before the learned dispute resolution panel however; same was not at all dealt with in its direction. In view of this, we set-aside this issue back to the file of the learned assessing officer with a direction to the assessee to furnish the requisite information, the learned assessing officer after considering the claim of the assessee may decide the same in passing the fresh draft assessment order which would once again go before the learned dispute resolution panel.
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