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TMI Blog2016 (9) TMI 1070X X X X Extracts X X X X X X X X Extracts X X X X ..... foreign exchange fluctuation with respect to import of plant and machinery, the assessee entered into forward contracts with BNP Paribas. According to the Ld. representative, the assessee took eight numbers of forward contracts. Due to suspension of automobile manufacturing plant, the original forward contracts were cancelled. Due to cancellation for forward contracts, the assesseecompany earned net foreign exchange gain of Rs. 25,82,81,725/- which was classified as income from other sources in the financial statements. The Ld. representative further submitted that since the foreign exchange gain was earned in the course of import of capital asset, namely, plant and machinery, the same was considered as capital receipt and not offered for taxation. According to the Ld. representative, any receipt in relation to purchase or sale of capital asset has to be necessarily considered as capital receipt, therefore, the gain in foreign exchange due to cancellation of forward contracts has to be treated as capital receipt and not liable for taxation. 4. The Ld. representative for the assessee further submitted that forward contract was taken by the assessee to protect the increased capital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the State and forward contract was consequently cancelled. The assessee admittedly earned foreign exchange gain to the extent of Rs. 25,82,81,725/-. The assessee claims the same as capital receipt on the basis of the judgment of Apex Court in Tata Locomotive and Engineering Co. Ltd. (supra). 7. In the case before the Apex Court, the assessee is engaged in the business of manufacturing of locomotive boilers and locomotives. For the purpose of manufacturing activity, the assessee had to purchase plant and machinery from various countries including USA. The assessee appointed a New York company, which is subsidiary of the assessee, as purchasing agent in USA. Thereafter, the assessee found it more expensive to buy American goods as Government of India imposed some restrictions on imports from USA. The assessee with the permission of Reserve Bank of India repatriated $ 49,500. This resulted in surplus and the Assessing Officer assessed the same as profit arising in the course of business activity. However, this Tribunal found that part of the surplus to the extent of $ 36,123 was from trading profit. On a reference, the Apex Court found that the surplus to the extent of $ 36,123 wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee, submitted that the assessee has paid advance tax to the extent of Rs. 54,61,897/-, which was not given credit by the Assessing Officer. 11. On the contrary, Smt. Vijayalakshmi, the Ld. Departmental Representative, submitted that if the assessee declared income for the assessment year under consideration corresponding to the advance tax paid, the Assessing Officer would have given the credit. However, it is not known whether the assessee has declared the corresponding income in the return. If the return does not contain the details of income with regard to advance tax payment, naturally the Assessing Officer would not give the necessary credit. 12. We have considered the rival submissions on either side and perused the relevant material available on record. When the assessee has paid advance tax to the extent of Rs. 54,61,897/-, the same has to be given credit while computing the tax payable by the Assessing Officer. Under normal circumstances, income-tax has to be paid on the assessed income. However, the Income-tax Act provides for payment of tax on income in advance before assessment of total income. When the assessee pays the tax in advance as per the scheme of I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s remitted back to the file of the Assessing Officer. The Assessing Officer shall reexamine the issue afresh and thereafter decide the same in accordance with law after giving a reasonable opportunity to the assessee. 17. The next issue arises for consideration is with regard to adjustment proposed by the Dispute Resolution Panel while determining the arm's length price. 18. Shri Sriram Seshadri, the Ld. representative for the assessee, submitted that the assessee is engaged in the business of engineering design and drawings of motor cars, specifically catering to the Indian market. The design services are in relation to aesthetic like of the motor vehicle which covers both interior and exterior of the vehicle. The assessee selected eight comparables and determined arithmetic mean at 12.13%. However, out of the eight comparables, the Transfer Pricing Officer found six comparables selected by the assessee are not similar to the assessee. Referring to Akshay Software Technologies Ltd., the Ld. representative submitted that the TPO rejected the comparable on the ground that Akshay Software Technologies Ltd. is engaged in software trade pertaining to financial services. Referring ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iate data to be used shall be the data relating to the financial year in which the transaction is entered into. The TPO as well as the DRP have also referred Rule 10B and found that since no functionally similar companies are available, the TPO and DRP have to necessarily consider the multiple year data available in the public domain. Therefore, according to the Ld. D.R., the DRP has rightly confirmed the order of the Transfer Pricing Officer. 20. We have considered the rival submissions on either side and perused the relevant material available on record. We have carefully gone through the provisions of Rule 10AB of the Incometax Rules, 1962, which reads as follows:- "For the purposes of clause (f) of sub-section (1) of section 92C, the other method for determination of the arm's length price in relation to an international transaction shall be any method which takes into account the price which has been charged or paid, or would have been charged or a specified domestic transaction or paid, for the same or similar uncontrolled transaction, with or between non-associated enterprises, under similar circumstances, considering all the relevant facts." In view of Rule 10AB of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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