Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2022 (8) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (8) TMI 511 - AT - Income TaxTP Adjustment - rejecting the combined transaction approach - comparing gross margin of controlled transaction with another controlled transaction - applying resale price method and comparing gross margin from international transaction pertaining to import of CBUs with the international transaction pertaining to import of spares - adjustment for differences in function, asset and risk profile of the spares segment vis-à-vis CBU segment - rejecting the separate transactional net margin method search - HELD THAT:- As transactions of import of completely built unit (CBU) and import of spare parts were closely and inter-linked to the manufacture of passenger car by the assessee and the said activity is to be bench marked on an aggregate basis along with other transactions under the umbrella of “manufacturing activity. The ld. D.R. also could not demonstrate or bring on record any facts or difference evidences and therefore, we are of the considered view, respectfully following the aforestated judgment on the same facts and circumstances and on same parity of reasoning, ground Nos. 3, 5, 6, 7 and 8 stand allowed. Entity-widen manufacturing activity - rejection of certain additional Indian companies and accepted certain inappropriate Indian companies as comparables - HELD THAT:- Hon’ble Delhi High Court in Nokia Siemens Network India P. Ltd. [2019 (8) TMI 167 - DELHI HIGH COURT] that a comparable cannot be rejected merely on the ground that it is recurring losses if the industry in which the comparable operating itself is incurring loss. Following this view, we direct the A.O/T.P.O to include HML as comparable in respect to the assessee company. As in any case what has been consistently held by the Tribunal and we are also in conformity that RPT filter of 15% should be adopted. In both the cases of comparables selected by the T.P.O., M&M have RPT from 25% to 30% and in case of TML the aggregate cost or revenue side transaction on a standalone basis are less than 30% as applied by the T.P.O. Therefore, in both these cases, the RPT filter is more than 15%. Accordingly, we direct the A.O/T.P.O to exclude the companies M &M and TML from the final set of comparables with respect to the assessee company. Computation of operating margin of the assessee at entity level without taking into consideration the excess custom duty paid on imports by assessee vis-à-vis comparable companies - HELD THAT:- The assessee before us placed reliance on judicial decisions of Demag Cranes & Companies (India) Pvt. Ltd.[2017 (10) TMI 1471 - ITAT PUNE] and Skoda Auto India Pvt. Ltd. Vs. ACIT [2019 (6) TMI 663 - ITAT PUNE] and prayed that the issue may be remanded back to the file of the A.O/T.P.O for re-computation of the operating margin of assessee after taking into consideration the excess custom duty paid on imports as non-operating in nature. The ld. D.R did not raise any objection in this regard. In view of the matter, this issue is restored to the file of the A.O/T.P.O to conduct the aforesaid exercise while complying with the principles of natural justice. Computation of operating margin of the assessee at entity level, without excluding additional cost on account of abnormal foreign exchange rate movement - HELD THAT:- As the assessee prays that the issue may be remitted back to the file of the A.O/T.P.O and he may be directed to re-compute the operating margin of MB (India) after making appropriate adjustment for abnormal movement in exchange rate treating it as non-operating in nature. The ld. D.R did not raise any objection. Computation of operating margin of the assessee at entity level without excluding extra-ordinary expenses on account of excess demurrage/detention charges and litigation claim - HELD THAT:- The assessee prayed that the learned A.O/T.P.O be directed to re-compute operating margin of the assessee after making appropriate adjustment for extra ordinary cost of demurrage/detention charges and litigation expenses treating it as non-operating expenditure. The ld. D.R did not raise any objection if this issue is remitted to the file of the A.O/T.P.O. In view thereof, we remand this issue to the file of the A.O/T.P.O as per the aforesaid prayer made by the assessee and re-adjudicate as per law applying with the principles of natural justice. Disallowance of expenditure incurred on homologation - Revenue or capital expenditure - HELD THAT:- As decided in own case [2019 (8) TMI 443 - ITAT PUNE] Homologation expenses are held as revenue expenditure. Ground stands allowed.
|