TMI Blog2020 (1) TMI 779X X X X Extracts X X X X X X X X Extracts X X X X ..... is directed to provide all relevant details in respect of these companies before DRP. Satisfaction of 75% trading filter - We are unable to discern the impact of manufacturing activity on turn over of the comparable company. Assessee do not object the functional similarity of this company. We direct Ld. AO/TPO to call for information under 133(6) of the Act from this company and then decide in terms of filters applied. - ITA (TP)A 2949/Bang/2018 - - - Dated:- 17-1-2020 - Shri B. R. Baskaran, Accountant Member And Smt. Beena Pillai, Judicial Member For the Appellant : Shri. Chavali Narayan, CA For the Respondent : Shri. Pradeep Kumar , CIT - DR ORDER PER BEENA PILLAI JUDICIAL MEMBER Present appeal has been filed by assessee against final assessment order dated 28/09/2018, passed by ACIT, Circle 5 (1) (2), Bangalore for assessment year 2014-15 on following grounds of appeal: That on the facts and circumstances of the case and in law: 1.The impugned order and directions of the Hon ble DRP are based on incorrect appreciation of facts and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xcluded from operating cost a. Provision for slow moving inventory b. Provision for retail shrinkage II. Items Excluded from operating revenue a. Liabilities no longer required written back b. Miscellaneous income 9. The Learned AO/TPO have erred in Laws and facts by not making suitable adjustment to account for differences in the risk profile of Puma Corporate vis- -vis the comparables ; 10. The Learned AO/TPO have erred in Laws and facts by computing the Alp without giving benefit +/-3 percent under proviso to section 92(2)of the Act; General Grounds: 11. The learned AO has erred in levying interest of INR 34,27,380 under section 234B, INR 30,675 under section 234C and INR 5,68,674 under section 234D of the Act; 12. The learned AO had erred, in laws and in facts, in initiating penalty proceedings u/s 271(1) (c) of the Act; The Appellant submits that each of above grounds is independent and without prejudice to grounds of appeal at any time before or at time of hearing of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Corporate Support fees 7888054 TNMM Total 591467508 Only disputed segment is regarding Purchase of Footware apparel and accessories from PUMA sports under specified domestic transaction. 2.1. Ld.TPO observed that, to determine arms length price of transaction in purchase of footwear apparel and accessories from Puma sports India, assessee has used TNMM as most appropriate method and OP/OC as PLI. Assessee used following 8 external comparables for carrying out comparability analysis with an average margin of 0.92% as against assessee is net margin of 1.48%. Sl.No Name of the Company (M/s) Weighted Average Margin(%) 1 Arvind Lifestyle Brand Ltd. 1.97 2 Arvind Retail Ltd. NA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of ₹ 2,71,44,382/- in trading segment. Aggrieved by proposed adjustment, assessee raised objections before DRP. 3. DRP rejected 3 comparables being; Pantaloons fashion and retail Ltd; P I L industries Ltd; Ostwal Knit India Ltd; 3.1. On receipt of DRP direction, Ld.AO passed impugned order against which assessee is in appeal before us. 4. At the outset, Ld.AR submitted that Ground No. 1-3, 5 are general in nature and do not require any adjudication. It is submitted that Ground No. 4, 8, 9 are not pressed by assessee. Accordingly these grounds stands dismissed. 5. Additional grounds filed by assessee: Assessee filed application for admission of following additional grounds on 10/07/19: On the facts and in the circumstances of the case and in law 13. The learned DRP/TPO has erred in law and facts in applying filter of companies having negative PBIT and negative net worth for rejection of companies. 14. Without prejudice to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Accordingly, application for admission of additional grounds stands allowed partly. Only grounds pressed by assessee to be adjudicated are Ground 6 (i)-(ii) - 7 and Additional ground No. 13-14 6. Ground 6(i) (ii) and Addl.Gr.13-14 Ld.AR submitted that thus in all assessee alleges following comparables for inclusion/exclusion: For Inclusion: Pantaloons fashion and retail Ltd; P I L industries Ltd; For Exclusion: Ostwal Knit India Ltd; 6.1. DRP while considering these comparables for inclusion/exclusion, has not examined on account of the reference points in Rule10B(2). The grievance of assessee in case of Pantaloons Fashion and Retail Ltd., and PIL Industries Ltd., is that, revenue does not dispute similarity in FAR with that of assessee. These comparables have been excluded some really by holding that they do not satisfy the negative PBIT and negative net worth filter applied by Ld.TPO. It has been submitted by Ld.AR that merely because these comparables made loss would not ipso facto result in its ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ails in respect of these companies before DRP. In the result these grounds raised by assessee stands allowed for statistical purposes 7. Ground No. 7 This ground has been raised by assessee alleging exclusion of Oswal Knit and India Ltd as a comparable. Ld.AR submitted that this company is primarily a manufacturing company and do not satisfy various filters applied by Ld.TPO. Ld.AR referring to page 550-551 of paper book submitted that this company does not satisfy 75% trading filter applied by Ld.TPO. He submitted that during the year this company has imported raw materials and spare parts components to the extent of ₹ 8,33,72,000/-. It is submitted that, this company cannot be considered as comparable, as it is engaged in manufacturing operations. 7.1. On the contrary Ld. CIT. DR placed reliance upon observations of DRP which are as under: The assessee pleaded for exclusion of Oswal Knit and India Ltd., for the reason that it has manufacturing activity. The contentions of the assessee is carefully examined and facts are verified. As seen from annual report the sales are ..... X X X X Extracts X X X X X X X X Extracts X X X X
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