TMI Blog2019 (6) TMI 1577X X X X Extracts X X X X X X X X Extracts X X X X ..... t was required to be done by him. In our considered opinion if the learned Departmental Representative is allowed to fill in the gaps left by the AO/TPO it would amount to conferring the jurisdiction of the CIT u/s 263 to the Departmental Representative, which is not permitted by the statute. Let us take another situation. Suppose a particular deduction is permissible on the cumulative satisfaction of three conditions. The AO examines the case and finds the very first condition as tacking. Without examining the fulfillment or otherwise of the other two conditions, he rejects the claim, in that case if such first requirement is subsequently found to be fulfilled in the appellate proceedings, the Departmental Representative can very well point out to the tribunal that the other two conditions were a/so not fulfilled. As held by the authorities below that proper allocation keys of common expenses between export and other segment have not been provided. In this connection assessee has submitted that if the common expenses are allocated by applying any of the keys the operating margin of the export segment would compare favourably with the operating margin of the comparables. This pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ute resolution panel order dated 20.10.2016. 2. The grounds of appeal read as under Based on the facts and circumstances of the case, Supermax Personal Care Private Limited (hereinafter referred to as 'the Appellant') respectfully craves to prefer an appeal against the assessment order issued by the Assistant Commissioner of Income-tax (LTU)-1, Mumbai (hereinafter referred to as the 'Assessing Officer') under section 143(3) read with section 144C(13) in pursuance of directions of the Dispute Resolution Panel- 2 and order of Joint Commissioner of Income Tax, Transfer Pricing-4(1), Mumbai (hereinafter referred to as the 'learned TPO') on the following grounds, each of which are without prejudice to one another: On the facts and in the circumstances of the case and in law, the learned AO/ learned TPO on fact and in law has: Addition on account of transfer pricing adjustments General 1. erred in making an adjustment of INR 33,66,72,501 to the total income of the Appellant under Section 92CA(3) of the Act on account of adjustment in the arm's length price of the international transaction of sale of raw materials and goods. 2. erred in determini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... without appreciating the fact that the Appellant has not furnished any inaccurate particulars of income. Corporate tax grounds Levy of interest under section 234A of the Act 11. erred in levying interest of ₹ 13,21,630 under section 234A of the Act without appreciating that the return of income was filed within the specified due date. Excess levy of interest under section 234B of the Act 12. erred in computing interest under section 234B of the Act at ₹ 6,80,35,642, instead of ₹ 6,59,93,320, resulting in excess interest levy of ₹ 20,42,322. Excess levy of interest under section 234C of the Act 13. erred in levying interest under section 234C of the Act on the assessed income without appreciating that interest under section 234C is leviable on the returned income. The above grounds of appeal are independent and without prejudice to each other. The Appellant craves leave to add, alter, vary, omit, substitute or amend the above grounds of appeal, at any time before or at the time of hearing of the appeal, so as to enable the Honorable Members to decide this appeal according to law. 3. Brief facts of the case are that assessee is engag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t for the apportionment of the expense proper allocation keys are required to be used to ascertain the profit margin of the respective segment. Hence the dispute resolution panel rejected the assessee's objection. Against this order that assessee is in appeal before us. 6. We have heard both the counsel and perused the records. Leaned counsel of the assessee submitted that firstly there is no mandatory requirement for submitting audited segmental accounting. Nevertheless he submitted that even if the common expenses are allocated on the basis of whatever basis the operating margin of the assessee for the export segment would compare favourably with the mean of the operating margin of the comparables as selected by the TPO. Hence he submitted that authorities below have totally erred in rejecting the assessee's submission on the ground that segmental account is not audited. 7. Per Contra learned departmental representative would not disputed the proposition that even if the common expenses are allocated on the basis of whatever allocation key chosen the operating margin of the export segment of the assessee would compare favourably with that of the comparables selected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in an attempt to show that the AO/TPO failed to do what was required to be done by him. In our considered opinion if the learned Departmental Representative is allowed to fill in the gaps left by the AO/TPO it would amount to conferring the jurisdiction of the CIT u/s 263 to the Departmental Representative, which is not permitted by the statute. Let us take another situation. Suppose a particular deduction is permissible on the cumulative satisfaction of three conditions. The AO examines the case and finds the very first condition as tacking. Without examining the fulfillment or otherwise of the other two conditions, he rejects the claim, in that case if such first requirement is subsequently found to be fulfilled in the appellate proceedings, the Departmental Representative can very well point out to the tribunal that the other two conditions were a/so not fulfilled. By so contending the DR cannot be said to set up a new case, Rather it would amount to supporting the view point of the Assessing Officer on the question of deduction. But in no circumstance the Departmental Representative can be allowed to take a stand contrary to the one taken by the AO/TPO . Learned Counsel of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ogether new case. Authorities below objected to comparability of assessee's export segment with the comparable selected by the TPO only on account of their observations regarding absence of proper allocation key. It was never their case that there is lack of comparability. Learned departmental representative is well within his rights on supporting the order's of the authorities below. However he cannot argue that the transfer pricing officers action is incomplete and therefore the issue needs to be set aside so that the transfer pricing officer can be given a second innings. Such a view was rejected by the ITAT in the case of Maersk Global Services Centre (I) P. Ltd.(supra) above, which was duly upheld by the honourable jurisdictional High Court. 12. In the background of aforesaid discussion and precedent we find cogency in assessee's submission that the operating margin of the export segment of the assessee can be compared with the profit margin of the comparables selected by the transfer pricing officer by any allocation key selected. The TPO is directed to examine the veracity of this submission and delete the adjustment on account of arm's length price, if th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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