Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2019 (4) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (4) TMI 1934 - AT - Income TaxTP Adjustment - upward Arms Length Price adjustments made on its Associated Enterprise sales to Associated Enterprise, corporate guarantee and overdue receivables as also adoption of TNMM as most appropriate method as against CUP - HELD THAT:- Adoption of TNM Method as MAM against CUP - We are of the opinion that assessee having not maintained segmental results in its books of accounts, nor prepared segmental results, ld. TPO was justified in rejecting CUP as the most appropriate method. As pointed out by the ld. DRP adopting CUP means there should be exact comparables and a comparability done with rates of minerals put out in a publication, in our opinion would not suffice the requirement of a CUP analysis. The above work out has not been disputed by the Revenue. It may be true that assessee had not maintained segmental accounts and the above working can have therein some allocation of common expenses. Nevertheless, ld. TPO considered assessee to have maintained no segmental data. When the trading was mainly in minerals, in our opinion there was no reason why an aggregated result could not have been considered for the Arms Length Price analysis when TNM was considered as MAM. Even if we presume that average PLI worked out by the ld. TPO was correct, and even if we substituted the negative PLI of 6.54% worked out by the ld. TPO with the negative PLI 3.39% of considered by the assessee for its iron ore/ millscale segment, still its aggregate PLI was much more than the average PLI of 4.89% of the selected comparables. In our opinion, in such circumstances, there was no scope for making any Arms Length Price adjustment based on TNMM method on the trading results of the assessee. We have thus no hesitation in deleting the upward adjustment of B12,66,82,138/- made by the ld. Assessing Officer on assessee’s trading with its Associated Enterprises. Upward adjustment for corporate guarantee fees - whether corporate guarantee would be amenable to a Arms Length Price adjustment, when no fee is charged by assessee on an Associated Enterprise which was its wholly owned subsidiary, stands answered by Kolkata Bench of the Tribunal in the case of EIH Ltd [2018 (1) TMI 1372 - ITAT KOLKATA] - Following the decision of Kolkata Bench of the Tribunal in the case of EIH Ltd (supra), we are of the opinion that there was no scope for making any adjustment for corporate guarantee fees on the corporate guarantee given by the assessee to its Associated Enterprise. Upward addition on corporate guarantee fees stands deleted. Arms Length Price adjustment imputing interest on overdue receivables - Once there is complete uniformity followed by assessee in not charging any interest from any party, whether Associated Enterprise or Non Associated Enterprises, in our opinion there could not be any selective imputing of notional interest. Submission of the assessee that out of total sales of about of B261 Crores to its Associated Enterprise, B100 Crores was received well within the due date and small delays were only in the balance of B161 Crores has not been disputed by the ld. Departmental Representative. Assessee had not offered any discount to any party for payment of bills before the expiry of the credit period. Hence, it is only a natural corollary that it did not charge any interest for delays also. Where a good part of the dues were collected earlier to the due date, in our opinion the instances where there were delays could not be selectively elected for a levy of charge of notional interest. Such an approach if accepted will completely overlook commercial realties. That apart, once TNMM method is considered as the most appropriate method, as held by Ahmedabad Bench of the Tribunal in the cases of Bisazza India (P) Ltd [2018 (8) TMI 1834 - ITAT AHMEDABAD] the net margin worked out there under could take care of all such notional interest cost, wherever it could be imputed and there could be no Arms Length Price adjustment for any overdue receivables. We therefore delete Arms Length Price adjustment made on overdue receivables.
|