TMI Blog2015 (10) TMI 998X X X X Extracts X X X X X X X X Extracts X X X X ..... nancial breakup relating to profitability with AE and non-AE transactions.Considering these facts and circumstances of the case, we are of the considered view that the matter is required to be remitted back to the file of the Ld.TPO to once again verify as to whether the segmental financial break up relating to profitability from AEs and non-AE are available to the satisfaction of the Revenue. If the assessee is able to establish the same, then the Ld. TPO shall pass appropriate order as per law and merits considering the case laws cited by the Ld. AR herein above - Decided in favour of assessee for statistical purposes. Disallowing U/s. 40(a)(ia) - A.R. submitted that the amount was expenses incurred during the assessment year 2008-09 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udication:- (i) The Ld. Assessing Officer /TPO have erred in law and on facts in adopting the entity level margin of 23.21% of the assessee instead of A.E segment margin of 45.41% while determining the Arm s Length Price (ALP). (ii) The Ld. Assessing Officer /TPO has erred in law and on facts in disallowing the expenses amounting to US Dollar $30,600 equivalent to ₹ 15,20,849/- by inadvertently considering the same as expenses incurred during the relevant year under consideration viz. Assessment year 2009-10, when the fact was that, this expense was incurred during the earlier assessment year viz. 2008-09 which was already disallowed in that year for non-deduction of TDS. 3. The brief facts of the case are that the assessee i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essing Officer/TPO/DRP did not agree to recognize the assessee s segmental profit margin with Associated Enterprises (AE) of 45.41% but had taken into account of the assessee s entity level profit margin of 23.21% as comparable with other comparable companies viz. Genesys International Ltd, KLG Systel Ltd. and Neilsoft Ltd having profit margin of 58.44%, 31.08% and 8.92% respectively. Since the average percentage profit of the comparable companies was 32.81% as against the assessee s entity level profit margin of 23.21%, the TPO had proposed the upward adjustment. The Ld. A.R had submitted before the Revenue that the assessee company renders services to its AEs as well as unrelated parties and therefore, internal profitability from renderin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... level profitability with external comparables. The Ld. A.R. further brought to our notice that the TPO had accepted the segmental profitability provided by the assessee for the subsequent assessment year 2010-11 and had not made any adjustment to ALP for international transactions entered between the assessee within AEs. The Ld. A.R. further pointed out that the financial data provided to the TPO for the assessment year 2010-11 was the same as the data provided for the year under appeal viz. assessment year 2009- 10 and the same was accepted by the TPO who had recognized the segmental profitability of the assessee s transaction with its AEs for the assessment year 2010-11. The Ld. A.R. further relied on the following case laws:- a) Deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TPO in order to examine the segmental financial data of the transaction between the assessee company and its AEs because the Ld. A.R had vouched the availability of the same, the Ld. D.R though resisted the proposal could not successfully argue in support of the same. 4.4. We have heard both the parties and carefully perused the materials available on record. The main contention of the Ld. A.R. was that for the purpose of determining the ALP for the transactions related to the assessee company with that of its AEs, internal comparison would be more appropriate than the external comparison, i.e., internal profitability from services rendered to unrelated parties should be used as bench-mark to determine the ALP for services rendered to as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowed by the Revenue for non-deduction of tax in that assessment year. It was further submitted that during the relevant assessment year 2009-10, the Revenue had inadvertently disallowed the same once again. It was therefore argued by the Ld. A.R. that this Act of Revenue would amount to duplicity of disallowance and therefore erroneous. It was accordingly pleaded that the addition made based on the disallowance of ₹ 15,20,849/- may be deleted. Ld. D.R agreed before us that the matter may be sent back to the file of Ld. Assessing Officer to verify the contention of the Ld. A.R., and if the same was double disallowance, then the addition made based on such disallowance may be deleted. Considering the submissions of both the Ld. A.R. an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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