TMI Blog2020 (6) TMI 98X X X X Extracts X X X X X X X X Extracts X X X X ..... udicial Member For the Appellant : Shri Rajan Vora, CA For the Revenue : Shri Pradeep Kumar, CIT ORDER PER A.K.GARODIA,: AM This appeal is filed by the assessee and the same is directed against the assessment order dated 20-11-2018 passed by the AO u/s 143(3) r.w.s.144C (13) of the IT Act, 1961. 2. The grounds raised by the assessee are as under; Based on the facts and circumstances of the case and in law, Cisco Systems Capital (India) Private Limited (hereinafter referred to as 'Cisco Capital India' or 'the Appellant'), respectfully craves leave to prefer an appeal against the order passed by the learned Assessing Officer (hereinafter referred to as the 'learned AO') dated November 20, 2018 under section 143(3) read with section 144C(13) of the Income-tax Act, 1961 ('the Act') pursuant to the directions dated September 28, 2018 issued by the DRP u/s 144C (5) of the Act ('the Impugned order') inter-alia on the following grounds: That on the facts and circumstances of the case and in law: A. Grounds of appeal relating to corporate tax matters 1. The learned AO has erred in law and in fact by disreg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on with the impugned international transaction and holding that the Assessee's international transaction is not at arm's length. 8. The learned TPO/ AO have erred, in law and in fact, by accepting certain companies based on unreasonable comparability criteria. a) Galada Finance Limited b) Shalibhadra Finance Limited c) Sundaram Finance Limited d) Trishakthi Electronics Industries Limited 9. The learned TPO/ AO have erred, in law and in fact, by rejecting certain companies based on unreasonable comparability criteria. a) Arman Financial Services Limited b) Fedbank Financial Services Limited c) ISF Limited d) Mahaveer Finance India Limited e) Muthoot Capital Services Limited 10. The learned TPO/ AO have erred, in law and in fact, by determining the arm's length margin/price using only FY 2013-14 data, which was not available to the Assessee at the time of complying with the transfer pricing documentation requirements. 11. The learned TPO/ AO have erred, in law and in fact, by rejecting the use of multiple year data for transfer pricing analysis in transfer pricing documentation requirements. 12. The learned TPO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before or at the time of hearing of the appeal, so as to enable the Hon'ble Tribunal to decide on the appeal in accordance with the law. 3. The assessee has also raised additional ground numbered as 22 which reads as under; Based on the facts and circumstances of the case and in law. Cisco Systems Capital (India) Private Limited (hereinafter referred to as 'Cisco Capital India' or the 'Appellant'). respectfully craves leave to file additional grounds of appeal in addition to the grounds of appeal filed previously by the Appellant on January 25. 2019. which are detailed herein below: On the facts and in the circumstances of the case and in law: 22. Without prejudice to the fact that Appellant's transfer pricing analysis is correct and should not be rejected, if an addition is proposed to the taxable income of the Appellant. the Appellant submits that such addition (if any) should be restricted in proportion to the value of the international transaction with the Associated Enterprise (`AE') vis-a-vis the total purchases of the Appellant during the year (which comprises of uncontrolled transactions). The Appellant craves, to consider each of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re-produced herein below: 7. Be it as it may, as at page 18 of the final assessment order for the AY 2011-12. the AO records that the assessee was asked to produce copies of agreements and that the assessee had only produced a few of them. We agree with the argument of the Id. DR that at least some more agreements have to be produced for examination before the AO. so that the submissions of the assessee that, the terms of the agreement in these financial leases are similar to the terms of the agreement considered by the Hon'ble Supreme Court in the case of ICDS Ltd. (supra) is correct or not. 8. In view of the above discussion, we set aside the issue to the file of the AO for fresh adjudication in accordance with law. The assessee is directed to produce copies of those agreements which the AO may call for. The AO shall examine these agreements and if the terms conditions mentioned in these agreements are similar to the terms and conditions mentioned in the agreements considered by the Hon'ble Supreme Court in the case of ICDS Ltd. (supra) and if there are no material variations in the contracts, then depreciation has to be granted to the assessee as claimed. Wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the argument of the assessee that the purchase price of the equipment cannot be determined based on ROCE adopting TNMM as the MAM. This does not appear to be a correct method. CUP is a more direct method and when internal CUP is available for determination of ALP, it would be the most direct method and this, in our view, has to be adopted as the MAM. 26. It is also submitted that the cost of imported equipment is the basis on which the assessee determines the rate of return to be charged from the ultimate customer and that if the price of the purchase is inflated, then the rate of return would also be high. The Id. counsel further submitted the only adjustments that could be made is on account of depreciation on these assets, as this is the only item of expenditure that affects the profit loss account. We would not express any view on this argument. 27. In view of the above discussion, we set aside the matter to the file of the AO for fresh adjudication in accordance with the law. The AO shall, without being influenced with the methodology adopted by the assessee in its TP study, independently decide as to what is the MAM for determination of ALP for the internationa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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