TMI Blog2018 (10) TMI 1814X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer is directed to exclude the loss or gain in foreign exchange fluctuation from the operating income for computing PLI. Working capital adjustment for determination of arm's length price - Working capital adjustment has to be made. However, the AO shall find out the working capital of the comparable companies and that of the assessee by issuing notice u/s 133(6) of the Act if necessary, and thereafter shall make necessary adjustment while computing PLI. Transaction of the assessee with Associated Enterprise outside the country only and compare the same with the transaction made by the similarly placed company in uncontrolled transaction with non Associated Enterprise. - IT(TP)A No. 27/Chny/2018 - - - Dated:- 5-10-2018 - SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER For the Appellant : Shri S. Raghunathan, Advocate For the Respondent : Dr. M. Srinivasa Rao, CIT ORDER PER N.R.S. GANESAN, JUDICIAL MEMBER: This appeal of the assessee is directed against the assessment order dated 28.06.2018, passed consequent to the direction of the Dispute Resolution Panel dated 09.05.2015, for the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ajit Engineering Ltd. produced by the assessee before the TPO and DRP is not reflecting the correct status of the profit. According to the Ld. D.R., these are all prepared for the purpose of market, therefore, the same cannot be placed much reliance. Hence, according to the Ld. D.R., M/s Suprajit Engineering Ltd. is also one of the comparable which was rightly taken as comparable by the TPO and DRP. 4. We have considered the rival submissions on either side and perused the relevant material available on record. Admittedly, the assessee is engaged in the business of manufacturing brake lining to automobile industry, more particularly, 4-wheeler. The assessee claims that the brake lining manufactured by the assessee was supplied to Hyundai Motor India Ltd. Similarly, M/s Suprajit Engineering Ltd. is also manufacturing brake lining for 4-wheeler automobile manufactured by various automobile industries. In addition to that, M/s Suprajit Engineering Ltd. also manufactures brake lining for 2-wheeler. The assessee claims that since M/s Suprajit Engineering Ltd. is manufacturing products not only for 4- wheeler but also for 2-wheeler and segmental details are not available, hence it ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M. Srinivasa Rao, the Ld. Departmental Representative, submitted that the foreign exchange loss or gain arising due to revenue receipts shall form part of operating income. The reinstatement of accounts was made only for the purpose of Accounting Standard, therefore, loss or gain on account of foreign exchange fluctuation due to reinstatement of account is only a notional, therefore, it cannot be excluded from operating income. 8. We have considered the rival submissions on either side and perused the relevant material available on record. An identical issue was considered by the co-ordinate Bench of this Tribunal in Hanil Tube India Pvt. Ltd. (supra). This Tribunal after referring to safe Harbour Rules, found that the loss incurred by the assessee in foreign exchange fluctuation due to international transaction does not give any extra benefit to the Associated Enterprise who supplies the material. The loss arose due to exchange difference between the foreign currency and Indian currency. Therefore, the coordinate Bench of this Tribunal found that the foreign exchange loss or gain has to be excluded from operating income. In view of the decision of co-ordinate Bench of this Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be confirmed. 12. We have considered the rival submissions on either side and perused the relevant material available on record. As far as working capital adjustment was concerned, this Tribunal in the case of Doosan Power Systems India Pvt. Ltd. (supra) found that working capital adjustment has to be made while computing PLI. In view of this decision of co-ordinate Bench of this Tribunal, the working capital adjustment has to be made. However, the Assessing Officer shall find out the working capital of the comparable companies and that of the assessee by issuing notice under Section 133(6) of the Act if necessary, and thereafter shall make necessary adjustment while computing PLI. 13. Now coming to payment of interest on delayed receivables, as found in the order of this Tribunal in the assessee's own case for assessment year 2013-14, actual interest paid was never considered by the assessee, therefore, this Tribunal do not find any reason to interfere with the orders of the lower authorities and accordingly the same are confirmed. 14. The next issue arises for consideration is computing the OPM of the comparable companies by the Assessing Officer while giving ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ociated Enterprise. 19. On the contrary, Dr. M. Srinivasa Rao, the Ld. Departmental Representative, submitted that this Tribunal in the case of Caterpillar India Pvt. Ltd. v. ACIT in I.T.A. Nos.204 365/Mds.2012 dated 05.04.2017 found that the entire transactions shall be taken into account. Subsequently, by following the judgment of Bombay High Court in CIT v Alstom Projects India Limited (394 ITR 141) this Tribunal found that only the transaction of the assessee with Associated Enterprise shall be taken into consideration. The Revenue has filed appeal before the Apex Court and the SLP is pending against the judgment of Bombay High Court. Therefore, according to the Ld. D.R., to keep the matter alive, the TPO and DRP have rejected the claim of the assessee. 20. We have considered the rival submissions on either side and perused the relevant material available on record. The Income-tax Act, being a special enactment, the judgment of Bombay High Court on the subject, as on today, rules the field. Therefore, the coordinate Bench of this Tribunal, after following the judgment of Bombay High Court in Yongsan Automotive India Pvt. Ltd. (supra), found that the transaction of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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