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Diastar Jewellery Ltd Versus Dy. Commissioner of Income Tax, Range – 8 (1) , Mumbai

TP adjustment - adopted the ALP margin at 35.18% in place of 22.17% and thus, arriving at an adjustment of ₹ 1,45,10,908/- Held that:- TPO has arrived at the figure of 35.18% margin in the cases of non-AE sales. Such calculation is not made part of the TPOs order. Ld. DRP also did not give any reason to reduce the rate of 35.18% to 30% and same has been reduced in adhoc manner. As against these actions of TPO and DRP, it is the case of the assessee that on similar transaction in earlier ye .....

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, we restore the issue to the file of TPO with a direction to consider this issue denovo and pass a reasoned and speaking order - Decided in favour of assesse for statistical purposes.

Addition on account of employees contribution to PF and ESIC - Held that:- After hearing both the parties, respectfully following the aforementioned decision of Hon’ble Bombay High Court in the case of CIT vs. Ghatge Patil Transports Ltd., (2014 (10) TMI 402 - BOMBAY HIGH COURT)in which it has been held .....

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is found that the impugned amount is already offered to tax in assessment year 2004-05 and 2005-06, then no addition should be made in the present year and, if the contention of the assessee is not found to be correct, then the same may be added to the income of the assessee after giving the assessee a reasonable opportunity of hearing.- Decided in favour of assesse for statistical purposes. - ITA NO.9123/MUM/2010(A.Y. 2006-07) - Dated:- 11-3-2015 - SHRI I.P. BANSAL AND SHRI R.C.SHARMA, JJ. .....

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ence Ground No.2 is reproduced below: 2. The Hon ble DRP-1, Mumbai erred in law and on facts and circumstances of the case in restricting addition to ₹ 1,56,92,220/- (consisting of Adjustment u/s. 92CA 87,35,057, employees Contribution to PF & ESIC ₹ 20,85,163/- and Addition of Interest u/s. 41(1) of ₹ 48,72,000/-) against the original assessment where in Adjustment u/s. 92CA was of ₹ 1,45,10,908/- and ESIC and PF amount was of ₹ 20,65,183/- and Interest amount .....

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ion sustained is only to the extent of ₹ 87,35,057/-. (ii) Addition on account of employees contribution to PF and ESIC ₹ 20,80,153/- the dates have been described in the table reproduced at page 3 & 4 of the assessment order and all the payments are made by the assessee before 30/11/2006, which is due date of filing the return. (iii) Addition of interest under section 41(1) amounting to ₹ 48,72,000/-. 3. At the outset, it was submitted by Ld.AR that employees contribution .....

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DRP. 3.2 On this issue, after hearing both the parties, respectfully following the aforementioned decision of Hon ble Bombay High Court in the case of CIT vs. Ghatge Patil Transports Ltd., (supra), we delete the disallowance as all the payments are made before due date of filing of the return. 4. With regard to addition made under section 41(1) of the Act it was submitted by Ld. AR that the assessee has already offered this income in earlier assessment years and reference in this regard was made .....

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is made for outstanding and accrued interest which gets reversed in the next year. The Company is dealing with consortium of banks and is availing working capital and other finances from banks for which interest payable to all the banks. We are herewith enclosing the copy of account which gives the details of interest paid to various banks including, interest accrued for the year. In the year 2004-05 total interest paid is ₹ 2,15,07,756/-.(Annexure-F1-F3) We are herewith enclosing the deta .....

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refer annexure F-2) In the year 2005-06 total interest claimed as an expenditure is ₹ 1,17,10,006/- (Annexure Hi to H5). Actually company had incurred expenditure on interest of ₹ 1,40,07,041/-. However as the bank has given waiver of interest of ₹ 48.72 lacs as per their letter dated 24.04.2006, the company has reversed overdue interest amount of ₹ 22,97,035/-(Please refer Annexure H4 and Annexure I) and ₹ 22,86,099/- is offered under income from other sources. (Pl .....

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ut this on records and now humbly request yourselves to consider it and take it on records. As the company has already offered for tax the amount of ₹ 48.72 lacs in its published accounts, there can be no further addition required to be made. Hence appellant prays that this addition should be deleted. 4.1 It was submitted that Ld. DRP did not consider this issue in proper perspective and the matter may be restored back to the file of AO to verify the contention of the assessee and, if afte .....

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tention of the assessee and, if after verification, it is found that the impugned amount is already offered to tax in assessment year 2004-05 and 2005-06, then no addition should be made in the present year and, if the contention of the assessee is not found to be correct, then the same may be added to the income of the assessee after giving the assessee a reasonable opportunity of hearing. This issue is allowed for statistical purposes in the manner aforesaid. 7. With regard to the TP adjustmen .....

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tal 219,623,050 26,77,35,712 7.1 The assessee bench marked its transaction on the basis of Cost Plus Method. From the details, it was noticed by the TPO that out of total sales of ₹ 40.40 crores sales made to the AE were ₹ 14.84 crores as against non-AE sales of ₹ 25.56 crores. Thus, proportion of sales of the assessee was 34% to AE and 66% to non-AEs. The TPO further observed that gross margin earned by the assessee on cost on sales to AE is 22.16% as against gross margin earn .....

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on the ground that assessee is not maintaining segmental accounts for AE & Non-AEs and in such a case direct cost have to be allocated on turnover basis. He also found that power charges and wages were also not allocated in accordance with sale ratio and similarly there is difference in increased and decreased stock and also with regard to adjustment on account of foreign exchange. Therefore, TPO adopted the ALP margin at 35.18% in place of 22.17% and thus, arriving at an adjustment of ͅ .....

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of the assessee with regard to geographical difference and bulk sales and considering this aspect Ld. DRP has restricted the margin to 30% in place of 35.18% adopted by the TPO. 7.3 After narrating the facts, it was submitted by Ld. AR that due to non-availability of proper employees in the company, the matter could not be effectively represented either before TPO or before Ld. DRP. It was submitted that the same method has been adopted by the assessee from year to year and no TP adjustment has .....

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