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TMI Blog2022 (2) TMI 811X X X X Extracts X X X X X X X X Extracts X X X X ..... f the A.O.'s order passed u/s. 154 (order dated 31.01.2011). The A.O. after passing the order u/s. 143(3) of the Act, passed rectification order u/s. 154 of the Act giving effect to the order passed by the Transfer Pricing Officer (TPO) in determining the Transfer Pricing (TP) adjustment from Rs. 37,24,00,000, to Rs. 39,13,10,000, hence two appeals are filed by the assessee. The relevant assessment year is 2012-2013. 2. The grounds raised for both the appeals are identical. The assessee has also filed additional ground vide letter dated 27.11.2021. The additional grounds are essentially, shades of grounds raised in Form No. 36. The additional grounds are legal grounds supported by judicial pronouncements and does not require examinatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he A.O. had disallowed depreciation of Rs. 1,21,46,113. 4. Aggrieved by the final assessment order, the assessee has filed this appeal before the Tribunal, raising sixteen grounds and also various additional grounds. The issues raised in the grounds raised in Form No. 36 and the additional grounds are as follows:- Grounds raised in Form No. 36 (i) Grounds 1 to 3 - General. (ii) Grounds 4 & 5 - Application of turnover filter. (iii) Grounds 6 to 10 - Benchmarking of Royalty. (iv) Grounds 11 & 12 - Adjustments towards capacity utilization and project expenses. (v) Ground 13 - Restricting the adjustment to international transactions. (vi) Ground No. 14 - Two companies wrongly included as comparable companies. (vii) Ground No. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plied 5%. It was submitted that it is settled by various orders of the Tribunal that RPT filter of 15% should be applied. It was further submitted that the TPO had made TP adjustment at entity level, which is against the principle laid down by the Bangalore Bench of the Tribunal in the case of IKA India (P.) Limited v. ACIT reported in (2019) 101 taxmann.com 276 (Bangalore - Tribunal). As regards the capacity utilization, it was stated that the assessee had set up a new plant which had commenced production during the relevant assessment year. Therefore, it was submitted that the TPO ought to have granted the assessee the benefit of capacity utilization as stated in the order of the Tribunal in the case of IKA India (P.) Limited v. ACIT (sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Bradsten relied on by the Tribunal in the case of M/s. Genisys Engineering System (India) Pvt. Ltd. v. DCIT in ITA No. 1231/Bang/2010 (order dated 05.08.2011) was concerning IT industry. The TPO having applied the lower turnover filter has failed to apply the upper limit to the turnover. The DRP has arbitrarily changed the lower turnover filter to 10 times the turnover of the assessee's turnover, without any legal basis. Therefore, the entire issue of application of turnover filter has to be examined afresh by taking a proper FAR analysis. 7.1. Further, the TPO has applied RPT filter of 5% (para 7 at page 8 of the TPO's order), the application of filter at 5% has no basis and has no legal sanction. Various orders of the Bangalore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PO did not agree for these adjustments (refer page 5 and 6 of the TPO's order) for the following reasons:- (i) Adjustment has been made on comparable and not on the tested party. (ii) Company is already 10 years old and there is no logic in giving such adjustment in the 10th year of operation. However, the A.O. has disregarded the fact that the assessee had set up a new plant and the new plant had commenced production during the relevant assessment year. The details of the same are placed at pages 309 of the paper book. The Tribunal in the case of IKA India (P.) Limited v. ACIT (supra) had held that capacity utilization adjustment shall be granted. It was further held by the Tribunal that in absence of details, adjustment can be ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rding a reasonable opportunity of hearing to the assessee. 7.6. Hence, all the issues raised in this appeal are restored to the files of the AO/TPO. IT(TP)A No. 1346/Bang/2017 8. The learned AR, during the course of hearing, has stated that identical grounds/issue are raised in this appeal to that of IT(TP)A No. 1714/Bang/2016. It was submitted that if IT(TP)A No. 1714/Bang/2016 is disposed off, this appeal would be rendered infructuous. In view of the submission of the learned AR, the appeal in IT(TP)A No. 1346/Bang/2017 is dismissed as infructuous. It is ordered accordingly. 9. In the result, the appeal in IT(TP)A No. 1714/Bang/2016 is allowed for statistical purposes and IT(TP)A No. 1364/Bang/2017 is dismissed. Order pronounced on t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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