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Showing 201 to 220 of 1831 Records
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2017 (5) TMI 1637
Determining the arms length rate of interest in respect of transactions of loan in foreign currency between the associated enterprises - Held that:- As consistently held in several decisions by the tribunal that wherever the transaction of loan between the associated enterprises is in foreign currency then the transaction would have to be looked upon by applying the commercial principles in regard to international transaction. Therefore the domestic prime lending rate would have no applicability and the international rate LIBOR would come into play. It has therefore been held that LIBOR rate has to be considered while determining the arms length rate of interest in respect of transactions of loan in foreign currency between the associated enterprises. This view has also been accepted by the Hon’ble Delhi High Court in the case of CIT vs Cotton Naturals (I) Ltd.[2015 (3) TMI 1031 - DELHI HIGH COURT]
Composite income - Income from growing, manufacturing and sale of tea - comprises agricultural income to the extent of growing tea, which is not chargeable to tax and nonagricultural income to the extent it comprises of income from manufacture and sale of tea, which income is chargeable to tax - According to the AO Cess on green leaf was an expenditure which was attributable to the activity of growing of tea and would therefore be not allowable as deduction while computing income from manufacture and sale of tea - Held that:- The issue is concluded by the decision of the Hon'ble Jurisdictional High Court in the case of CIT vs AFT Industries Ltd. [2004 (7) TMI 81 - CALCUTTA HIGH COURT] where the amount paid as cess was held as eligible for deduction in computing the composite income under Rule 8 of I.T. Rules. This issue is, therefore, decided in favour of the assessee upholding the order of the C.I.T.(A) who has allowed the deduction of payment of cess on green leaves in computing the composite income from tea business of the assessee under rule 8 of the I.T. Rules. Also confirmed by M/S APEEJAY TEA CO. LTD [2015 (8) TMI 1260 - SUPREME COURT] - Decided against revenue
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2017 (5) TMI 1636
TPA - ALP determination - selection of MAM - DRP rejecting the CUP method adopted by TPO - Appropriateness of the TNMM method - Held that:- As decided in assessee;s own case in earlier years [2014 (5) TMI 1066 - ITAT PUNE] we find in principle the facts are the same. In those years too, Transfer Pricing adjustments were made to the transactions with Associated Enterprises with reference to the Export of goods and Import of the raw materials. Appropriateness of the TNMM method was also the issue in those years. Tribunal decided the issue in favour of the assessee and dismissed the appeal of the revenue on those issues. After hearing both the sides and perusing the contents of the DRP, we are of the opinion that the order passed by the DRP with reference to the most appropriate accounting method for TP study, is fair and reasonable and same does not call for any interference. Accordingly, the ground raised by the Revenue is dismissed.
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2017 (5) TMI 1635
Corporate insolvency process - permission to withdraw the Petition - Held that:- Application filed under Section 9 of the IBC 2016, for initiating Corporate Insolvency Resolution Process, has been admitted on 20/04/2017 and in compliance of the order dated 20/04/2017 publication of notice was made in Newspapers for inviting claim from other creditors and for declaration of Moratorium.
It appears from the provisions of Section 9(5)(ii)(b) that if repayment of the debt amount is made by the Operational Debtor, then adjudicating authority has power to reject the Petition, before admission of the Petition. After the admission, the Petition acquires the character of Representative suit and through publication of Notice in Newspapers, applications have been invited from all the creditors of the company to file their claim before IRP. After admission of the Petition under IBC 2016, the Petition cannot be dismissed on the basis of compromise between Operational Creditor and Operational Debtor, because other creditors of the company have also right to file their claim.
After admission of Petition under IBC 2016, the nature of petition changes to representative suit and the lis does not remain only between Operational Creditor and Operational Debtor. Therefore, Operational Creditor and Operational Debtor alone have no right to withdraw the Petition after admission. On the above basis it is clear that the Application regarding permission to withdraw the Petition is not maintainable at this stage and therefore, the IA deserves to be dismissed.
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2017 (5) TMI 1634
Corporate insolvency process - outstanding debt - financial debt - Held that:- There is no disciplinary proceedings pending against the Interim Resolution Professional, proposed by the Financial Creditor.
This Petition was listed before this Adjudicating Authority on 12.5.2017. This Adjudicating Authority directed the Financial Creditor to issue Notice of hearing. Financial Creditor, in compliance with the directions of this Adjudicating Authority, issued Notice of date of hearing and filed proof of despatch. On 17.5.2017, i.e., on the date of hearing, none remained present on behalf of the Corporate Debtor. The debt due to the Financial Creditor is a 'Financial Debt'. The Petition is complete in all respects. The 'Financial Debt' is defined in sub-section (8) of Section 5 of the Code.
In view of the above discussions, this Petition is admitted under Section 7 (5) of the Code.
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2017 (5) TMI 1633
Corporate insolvency procedures - outstanding debt - Held that:- This Petition was listed before this Adjudicating Authority on 12.5.2017. This Adjudicating Authority directed the Financial Creditor to issue Notice of hearing. Financial Creditor, in compliance with the directions of this Adjudicating Authority, issued Notice of date of hearing and filed proof of despatch. On 17.5.2017, i.e., on the date of hearing, none remained present on behalf of the Corporate Debtor. The debt due to the Financial Creditor is a 'Financial Debt'. The Petition is complete in all respects. The 'Financial Debt' is defined in sub-section (8) of Section 5 of the Code.
In view of the above discussions, this Petition is admitted under Section 7 (5) of the Code. This Adjudicating Authority is also appointing Company Secretary, Shri Nitin Hasmukhlal Parikh, residing at 7th Floor, 737, Fortune Tower, Sayajigunj, Vadodara-390005 (E-mail: nitin [email protected]) having Registration No. IBB1/1PA-002/1P-N00058/2016- 17/ 10110 as "Interim Resolution Professional" under Section 13(I)(b) of the Code.
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2017 (5) TMI 1632
Transfer pricing adjustment in the manufacturing segment - comparable companies selection - considering single year’s data in order to arrive at the PLI of comparable cases - Held that:- We uphold the order of Assessing Officer / TPO in considering single year’s data in order to arrive at the PLI of comparable cases, while applying transfer pricing provisions. The Tribunal has decided this issue in assessment year 2007-08 in paras 15 to 18 and the same are being referred to and are not being reproduced for the sake of brevity. The ground of appeal No.4 raised by the assessee is thus, dismissed.
Non-consideration of +/- 5% range - Held that:- Assessee is not entitled to the standard deduction under the proviso to section 92C(2) of the Act. However, where transfer pricing adjustment is within +/-5% range, then the assessee is entitled to the said benefit. Accordingly, the ground of appeal No.5 is dismissed.
Comparable selection - The assessee was engaged in the manufacture of resistors and capacitors which in turn, were used in various electronic applications / products. The assessee had Domestic Tariff Area unit for manufacturing capacitors and low end resistors, and an Export Oriented Unit for manufacturing certain high end resistors which are exported to overseas group entities, thus companies functionally dissimilar with that of assessee need to be deselected. Assessee has applied the filter and rejected the concern whose turnover from capacitors and resistors was less than 75% of the total turnover.
Non-exclusion of depreciation while calculating Profit Level Indicator of the assessee as well as the comparable companies arose before the Tribunal - Held that:- the assessee had made submissions for differential depreciation adjustment which was without prejudice to his claim. The assessee claims that the rate of depreciation i.e. depreciation / average written down value charged by the assessee at 17.97% was higher than average rate of depreciation charged by the comparable companies i.e. 12.07%. The assessee submits that excess depreciation should be excluded while computing operating margins of the assessee. We find no merit in the said plea of the assessee under Rule 10B(1)(e)(iii) of the Rules, adjustment if any, has to be made in the hands of comparables and not in the hands of tested party. We dismiss the plea of the assessee in this regard. However, in case the assessee is able to establish that there is material difference in the claim of depreciation by the assessee vis-à-vis comparables, then suitable adjustment may be allowed in the hands of comparables after due verification by the Assessing Officer / TPO.
We direct the Assessing Officer to allow the risk adjustment, if any, and re-compute the margins of comparables and compute the TP adjustment, if any, in the hands of assessee.
Computation of total income, wherein the Assessing Officer has not considered the loss but had computed the income by taking business income at Nil. The assessee fairly pointed out that it has already filed an application under section 154 of the Act before the Assessing Officer, which is pending. Accordingly, we find no merit in the said plea of assessee and the same is rejected. The Assessing Officer shall dispose of the application under section 154 of the Act as per law.
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2017 (5) TMI 1631
Provisional release/provisional assessment of the goods - import of Cold Rolled Steel Sheet Cutting Secondary and Defective Width Less than 600 MM detained illegally - principles of Natural Justice - Held that:- Despite repeated reminders as well as the circulars (Annexure P-2 Colly) issued by respondent No.1, neither the goods were released nor any reply to the letters sent by the petitioner was given. This Court vide order dated 29.9.2014 (Annexure P-3) passed in CWP No. 19750 of 2014 directed the respondents to release the imported goods within 48 hours in case the same were not prohibited goods.
The petition is disposed off by directing respondent No.2 to take a decision on the letters (Annexure P-4 Colly), in accordance with law by passing a speaking order and after affording an opportunity of hearing to the petitioner.
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2017 (5) TMI 1630
Deduction u/s 80IB on the amount of duty drawback - Income from Business – Held that:- On the very first issue, the issue is squarely covered by the decision of Supreme Court in Liberty India (2009 (8) TMI 63 - SUPREME COURT) as held duty drawback, rebate etc. should not be treated as adjustment (credited) to cost of purchase or manufacture of goods. - They should be treated as separate items of revenue or income and accounted for accordingly - for the purposes of AS-2, Cenvat credits should not be included in the cost of purchase of inventories - duty drawback, DEPB benefits, rebates etc. cannot be credited against the cost of manufacture of goods debited in the Profit & Loss account for purposes of Sections 80-IA/80-IB as such remissions (credits) would constitute independent source of income beyond the first degree nexus between profits and the industrial undertaking - Duty drawback receipt/DEPB benefits do not form part of the net profits of eligible industrial undertaking for the purposes of Sections 80I/80-IA/80-IB
The attempt made to distinguish the same by subsequent judgment, in our considered opinion, will not apply inasmuch as there is no cash transaction and netting off will not apply in the present case, therefore, first issue is required to be answered in favour of the department and against the assessee.
Allowing deduction u/s 80IB on interest earned on FDRs - interest income is not a business income and certainly not derived from the business of the industrial undertaking - Decided against assessee.
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2017 (5) TMI 1629
Cancellation of Registration Certificate denied - opportunity of hearing not provided - duty demand was raised on the respondent without bringing to its knowledge as to arise of duty liability denying cancellation of registration certificate - principles of natural justice - Held that:- For whatever reason duty liability arises, respondent is entitled to know the reason thereof through a proper show cause notice. For no such notice on record, learned adjudicating authority is directed to issue appropriate show cause notice to the respondent and grant opportunity of defence to it to determination of its liability if any arising under the Central Excise Act, 1944 - Only upon hearing the respondent, decision on cancellation of registration can be made.
The matter is remanded to learned adjudicating authority to grant reasonable opportunity of hearing to the respondent on the liability, if any, that arises for the impugned period bringing out the manner how such liability arises in a show cause notice - apepal allowed by way of remand.
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2017 (5) TMI 1628
Nature of expenditure - Treatment to payment of interest - revenue or capital expenditure - Held that:- ITAT was right and justified in treating the payment of interest as revenue expenditure even when the capital borrowed was used for purpose of capital assets.
Liabilities under Section 41 - Held that:- The issue is squarely covered by the decision of Supreme Court in the case of Commissioner of Income Tax Vs. Sugauli Sugar Works (P) LTD [1999 (2) TMI 5 - SUPREME COURT] as held Just because an assessee makes an entry in his books of account unilaterally, he cannot get rid of his liability. The question whether the liability is actually barred by limitation is not a matter which can be decided by considering the assessee's case alone but it is a matter which has to be decided only if the creditor is before the concerned authority - mere entry in the books of account of the debtor made unilaterally without any act on the part of the creditor will not enable the debtor to say that the liability has come to an end. Apart from that, that will not by itself confer any benefit on the debtor as contemplated by the section.
Payment of interest used for purchased of capital assets - Held that:- The issue is squarely covered by the decision of Supreme Court in the case of Empire Jute Co. LTD. Vs. Commissioner of Income Tax [1980 (5) TMI 1 - SUPREME COURT] wherein held if payment has to be made for securing additional power every week, such payment would also be part of the cost of operating the profit making structure and hence in the nature of revenue expenditure, even though the effect of acquiring additional power would be to augment the productivity of the profit-making structure. On the same analogy payment made for purchase of loom hours which would enable the assessee to operate the profit-making structure for a longer number of hours than those permitted under the working time agreement would also be part of the cost of performing the income earning operations and hence revenue in character.
Pre-operative expenses - Held that:- The issue in the case of Commissioner Income Tax Vs. Smt. Jyoti Devi[2008 (7) TMI 954 - RAJASTHAN HIGH COURT] - Appeal decided in favour of assessee.
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2017 (5) TMI 1627
Addition u/s 40(a)(ia)- non deduction of TDS on payment of job work - second proviso to section 40(a)(ia) applicability - retrospective or prospective effect - Held that:- Referring to diversified judgments on the issue it is settled law that if two views in regard to the interpretation of a provision are possible, the Court would be justified in adopting that construction which favours the assessee. See COMMISSIONER OF INCOME TAX-1 VERSUS ANSAL LAND MARK TOWNSHIP (P) LTD. [2015 (9) TMI 79 - DELHI HIGH COURT]
Thus held that the second proviso to section 40(a)(ia) of the Act is retrospective in nature. The Ld. CIT(A) accordingly correctly allowed the appeal of the assessee and deleted the disallowance on this issue. - Decided in favour of assessee.
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2017 (5) TMI 1626
Bogus purchases - purchase could not be confirmed as from the respective sellers because of business either closed or shifted - Held that:- We are of the opinion that the Assessing Officer's action in treating the purchases as bogus and adding the entire cost of purchases in the assessment ought not to have been restored by the Tribunal. The view taken by the Tribunal in the case of Vijay Proteins Ltd. v. CIT [1996 (1) TMI 144 - ITAT AHMEDABAD-C] has been approved. In that view of the matter, keeping in mind the fact that not the entire amount covered under such purchase, but the profit element embedded therein would be subject to tax, we find that it shall be appropriate to restrict the disallowance made in this regard to 25% of the cost of such purchases in each year.
25% of the payments made to the parties shall be disallowed on account of possible inflation of purchase price. Consequently, the impugned judgment and order passed by the ITAT is modified to the aforesaid extent. Appeal of the assessee is partly allowed.
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2017 (5) TMI 1625
CENVAT Credit - tippers which were used by them for rendering the services of site formation, clearance, excavation and demolition services - Held that:- An identical issue came before Tribunal Bench in the case of Ganta Ramanaiah Naidu Vs CCE, Guntur [2009 (9) TMI 261 - CESTAT, BANGALORE] wherein it was held that the cenvat credit availed on central excise duty on the tippers is ineligible as these vehicles are not capital goods, during the period in question, came to a conclusion on the basis of definition of Capital Goods and upheld the demand and interest - CENVAT credit not allowed.
Penalties - Held that:- It can be a view of the appellant that for rendering the services of site formation, clearance, excavation and earth filling and demarcation services on which service tax liability applicable and hence benefit of duty paid on tippers which are used for removal of from sites, could be treated as capital goods - as issue is of interpretation, the penalty not warranted and is set aside.
Confiscation of vehicles - Held that:- Having held that the appellant is liable to reverse the cenvat credit of such tippers which is to be held that they have reversed irregularly availed cenvat credit, provisions of rule 15 of Central Excise Rules would apply which mandate for their confiscation of the said tippers - confiscation upheld - quantum of redemption fine reduced.
Appeal allowed in part.
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2017 (5) TMI 1624
Penalty levied u/s 271G r.w.s 274 - when the assessee deliberately avoided the production of T.P. documentation as required u/s 92D - Held that:- Identical issue has been decided today in the case of same assessee in Commissioner of Income Tax vs. Bumi Hiway (I) P.LTD [2014 (9) TMI 321 - DELHI HIGH COURT] reference was not made to any particular or specific date by which assessee was required to submit the documents; or whether the same were furnished within 30 days or within the extended period of 30 days thereafter - Penalty u/s 271G cannot be imposed in this manner.
A specific finding should be recorded on the date by which the assessee was required to furnish documents and whether documents were furnished, if not which documents were not furnished and whether any extension of time was granted by the TPO and if the required documents were then actually filed - The penalty order is bereft and devoid of the details and shows lack of application of mind - TPO had indicated that the AO might initiate proceedings u/s 271G but he also did not refer to date of notice, date of furnishing of information/documents etc. - Decided in favour of the assessee and against the department.
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2017 (5) TMI 1623
Estimation of commission income - Reducing the estimated addition from 4% to 0.15% - bogus bills/accommodation entries - Held that:- We find that the assessee had not co-operated with AO during the assessment proceedings, that it was providing accomodation entries, that the AO estimated commission income of the assessee at 4% of the total deposits, that the FAA reduced the commission income and estimated the same at 0.15% of the aggregate of value of accommodation entries. The estimate made by AO was on higher side and had no basis. We would like to refer to the case of Gold Star Invest P. Ltd. (2008 (3) TMI 687 - ITAT MUMBAI), wherein under identical circumstances the Tribunal had estimated the commission income of the assessee @ 0.15 % of the aggregate value of the bogus bills/accommodation entries.
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2017 (5) TMI 1622
Definition and scope of "works contract" - nomenclature of agreement - Whether, any agreement by whatever name called, if it falls within the meaning and definition of work contract as defined under Section 2(I) of the M.P. Madhyastham Adhikaran Adhiniyam, 1983 has to be referred for adjudication before the M.P. Arbitration Tribunal constituted under Section 3 of the 1983 Adhiniyam?
Held that:- In the case of Kamini Malhotra (Supra), the learned single Judge considered the definition of 'works contract'. In addition, the meaning of word "building" was also considered. It was held that the definition of works contract is in wide spectrum. Its a definition of wide amplitude and application - the nomenclature of agreement is immaterial.
Any agreement by whatever name called, if it falls within the meaning and definition of "works contract" as per Adhiniyam of 1983, it must be treated as a works contract - By applying an artistic linguistic engineering, an agreement can be worded in a unique or a different manner. It may have a different nomenclature but these factors will not determine its real nature.
Whether, in view of statutory provisions of Section 7 of the Adhiniyam of 1983, the matter has to be referred to the M.P. Arbitration Tribunal constituted under Section 3 of the 1983 Adhiniyam, even in cases where the parties have incorporated a clause in agreement regarding resolution of dispute by some other forum or under the Arbitration and Conciliation Act, 1996? - Held that:- Sub-section (1) makes it clear that the aggrieved party to a works contract may refer its dispute in writing to the Tribunal irrespective of the fact whether there exists any agreement between the parties which contains an arbitration clause or not. Indisputably, the Adhiniyam of 1983 was held to be intra vires - The jurisdiction to decide a 'dispute' in a case of a works contract is with the Tribunal constituted under the Adhiniyam of 1983 - In view of statutory mandate contained in Section 7(i) of the Adhiniyam, the parties to a works contract needs to approach the Tribunal for resolution of their 'dispute'.
Whether, the substituted definition of work contract in the M.P. Madhyastham Adhikaran Adhiniyam, 1983 by Act No. 7 of 2017 is clarificatory and is applicable to the pending or future contracts? - Held that:- Since intention behind the amendment is to clarify that concession agreement will also fall within the definition of works contract, it will be an amendment by which earlier definition is "substituted" and not "superseded". In other words, there is a difference between "supersession" and "substitution" of a provision - the amendment by Act No. 7 of 2017 is clarificatory in nature and is applicable to pending and future contracts.
Any other ancillary issues arising out of the reference order - applicants/appellants advanced an alternative submission. It is contended that even if concession agreement is treated to be a works contract, the remedy under the Adhiniyam of 1983 can be invoked only when there exists a "dispute" between the parties - Held that:- The unamended definition of dispute includes "any difference" relating to "any claim" valued at ₹ 50,000/- or more. In our view, the words "any difference"" and "any claim" are much wider than the words used in the amended definition which confined the dispute to the "claim of ascertained money". The Legislature has definitely restricted the definition of dispute by consciously employing the words dispute means "claim of ascertained money". In unamended definition, any difference relating to any claim which was valued at ₹ 50000/- or more arising out of the execution or non-execution of works contract or part thereto was recognised as a dispute. Whereas, in the amended definition 'dispute' is confined to "claim of ascertained money". There is a remarkable difference in the language employed in both the definitions - thus, even if the present agreement is treated as a works contract, the Tribunal will have no jurisdiction to decide the difference between the parties unless it falls within the statutory definition of "dispute" under the Act of 1983 - A conjoint reading of section 2(d) and section 7 of the Adhiniyam makes it clear that a reference to the Tribunal can be made and entertained only when it is in relation to "the dispute". This ancillary issue is answered accordingly.
Reference disposed off.
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2017 (5) TMI 1621
Addition u/s. 36(1)(iii) V/S 14A - addition on the basis of Auditor's certificate in the form 3CD - CIT-A deleted the addition - corrigendum issued by the auditor to the tax audit report - Held that:- Since the draft assessment order has been passed on 27.12.2010 this letter was not considered by the AO. Even in the proceedings before CIT(A) attention of CIT(A) was not drawn to this letter. The revenue authorities have therefore proceeded on an erroneous assumption that the Tax audit report refers to disallowance of interest u/s 36(1)(iii) of the Act whereas in reality disallowance was done in the context of section 14A of the Act .
As clear from the corrigendum issued by the tax auditor to col.(l) 17 to the tax audit report that since the interest expenditure and depreciation mentioned in col. 17(l) of the tax audit report was expenditure in relation to section 10B unit which in deals with income exempt from tax, there was no disallowance u/s 14A of the Act which was necessary to be made. In other words, these expenses were not claimed as deduction against income which is chargeable to tax under the Act. With this clarificatory facts, we uphold the order of CIT(A) - the said sum was claimed as deduction only in arriving at the profits of 10B unit which was not chargeable to tax and therefore can be no effect on the determination of the total income of the assessee. - Decided against revenue
Upward adjustment - comparison of the net profit margin of the international transaction of the Assessee in comparison to the net profit margin of the comparables - CIT-A deleted the addition - Assessee itself compared the profit at enterprise level - Held that:- We are of the view that order of CIT(A) does not call for any interference. Section 92F(ii) lays down that "'arm's length price” means a price which is applied or proposed to be applied in a transaction between persons other than associated enterprises, in uncontrolled conditions.
It is clear from the statutory provisions especially Rule 10B( e) (i) to (iii) that it is only the international transaction that has to be compared with uncontrolled transaction and not the transaction undertaken by the entity as a whole. Hon'ble Mumbai ITAT in the case of UCB India (P) Ltd. V. ACIT [2009 (2) TMI 237 - ITAT BOMBAY-L] had held that sec, 92C read with Rule 10B(l) (e) deals with the Transactions Net Margin Method and it refers to only net profit margin realized by an enterprise from an international transaction or a class of such transactions but not operating margins of enterprises as whole.
As not disputed by the TPO that the net profit margin earned by the Assessee from the controlled international transaction was 39.25% in comparison to the average net profit margin earned by the comparables chosen by the Assessee at 27.072%. If one were to proceed on the basis of the comparable selected by the TPO and apply its profit margin of 20.91%, the Assessee’s profit margin of 39.25% is higher. Hence the comparison of the net profit margin of the international transaction of the Assessee in comparison to the net profit margin of the comparables is much better and the addition so made by the TPO & AO is wholly wrong and incorrect and was rightly deleted by the CIT(A).- Decided against revenue
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2017 (5) TMI 1620
Claim u/s 10(23c)(vi) denied - non adherence to conditions precedent for invoking Section 10 (23C)(vi) - Held that:- Though, finding has been recorded that the petitioner- Society has other purposes apart from the educational purposes but no supporting reasons have been assigned in the order impugned to hold that institution does not exists solely for the educational purposes though number of documents and audited accounts for three financial years have been filed by the petitioner-Society
Applying the ratio of law laid down by the Supreme Court in above referred case of Queen's Educational Society [2015 (3) TMI 619 - SUPREME COURT] in the facts of the present case, it is quite vivid that the conditions precedent for invoking Section 10 (23C)(vi) of the Act, 1961 has not been considered by Chief Commissioner of Income Tax in its proper perspective and, therefore, I deem it expedient to set aside the impugned order and remit back the matter to the Chief Commissioner of Income Tax to decide the petitioner's application afresh
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2017 (5) TMI 1619
TPA - selection criteria for comparables - applying of proper filter of turnover - Related Party Transaction (RPT) filter - Held that:- Both the parties have agreed in principle that 10 times of the assessee’s turnover on both sides shall be applied as a filter for selecting the comparable companies.
For Related Party Transaction (RPT) filter TPO applied 25% RPT. We find that neither the TPO nor the assessee has found any difficulty in selection of comparable companies. The TPO has selected as many as 20 companies in the final set of comparables. Therefore this is a normal case of availability of comparables. Accordingly, in view of the consistent view taken by this Tribunal that in the normal circumstances, the RPT tolerance range shall not exceed 15%.
Thus the comparability of the entire set of comparables has to be decided by applying the appropriate filter of turnover at 10 times of assessee's turnover on both sides and further RPT filter of 15%. We are of the considered opinion that the entire TP issue requires fresh examination and consideration at the level of TPO/A.O - set aside the TP issue including selection of comparables and functional comparability to the record of the TPO for consideration and adjudication.
Computing deduction under Section 10A - AO took the total turnover of the assessee at entity level instead of the turnover of Export Oriented Undertaking (EOU) - Held that:- Assessing Officer took the total turnover of the assessee at ₹ 29.04 Crores whereas the turnover of the EOU undertaking is ₹ 22.88 Crores. Therefore we find that the Assessing Officer has not taken the total turnover of the EOU undertaking. In view of the above facts and circumstances of the case, we direct the Assessing Officer to consider the total turnover of the EOU for the purpose of computing the deduction under Section 10A of the Act.
Deduction under Section 10A computation - AO has considered the entire cost of Employees Stock Option and RSU granted to the employees of the company by the holding company of the assessee - Additional ground - Held that:- There is no dispute that the claim made by the assessee in the additional ground was not raised either before the Assessing Officer or before the DRP. Therefore this is fresh plea raised by the assessee at this stage. So far as the legality of the issue is concerned, there is no bar for raising this legal issue at this level which is also covered by the decision of the Special Bench in the case of Biocon Ltd. Vs. DCIT (2013 (8) TMI 629 - ITAT BANGALORE). This issue also involves verification of the various facts and computation of deduction as it involves mixed question of law and facts and not a pure question of law - set aside this issue to the record of the Assessing Officer. - Appeal of the assessee is allowed for statistical purpose.
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2017 (5) TMI 1618
Existence of international transaction concerning the advertisement marketing and promotion (AMP) expenses - determination of the arm's length price - ITAT remanding the issues to the Transfer Pricing Officer for a fresh consideration - Held that:- Case before ITAT was argued at length and the views of the TPO as well as the Dispute Resolution Panel (‘DRP’) were already available to the ITAT. Arguments were advanced on the strength of judgments of this Court in Sony Ericsson Mobile Communications India Pvt. Ltd. vs. Commissioner of Income Tax [2015 (3) TMI 580 - DELHI HIGH COURT] as well as a string of subsequent judgments beginning with Maruti Suzuki India Ltd v. CIT [2015 (12) TMI 634 - DELHI HIGH COURT]
Main reason that weighed with the ITAT to remand the matter to the TPO was that the TPO did not have the benefit of the above decisions of this Court when the order was initially passed by the TPO is not acceptable as it can hardly be a ground for remanding the entire matter to the TPO. In fact, this was anticipated by this Court in Sony Ericsson Mobile Communications India Pvt. Ltd.(supra)it cautioned that the ITAT should not simply remand the matter to the TPO but examine it itself, particularly when the facts have already been analysed and considered and no new facts have emerged in the meanwhile.
In the present case, all the facts necessary for the ITAT to form an opinion on the issues before it concerning the AMP expenditure were already before it. Remand to the TPO of the entire matter for a decision afresh appears to be unwarranted. Appeal before the ITAT is restored to its file for a decision on merits.
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9911796707
