TMI Blog2021 (1) TMI 1290X X X X Extracts X X X X X X X X Extracts X X X X ..... Y. 2010-11.In the light of the above, the AO is directed to ascertain the nature of services rendered by the assessee and examine the comparability of the companies indicated therein. Accordingly, this issue is remanded the file of AO/TPO for fresh examination. The assessee is liberty to file evidences, if any, in support of its claim. TDS u/s 195 - Disallowance u/s. 40(a)(i) - assessee for convenience Vishay India hereafter paid an amount to its Associated Enterprise (AE) i.e. Vishay Intertechnology Asia Pte Ltd., Singapore - HELD THAT:- Tribunal in assessee s own case for A.Y. 2012-13 [ 2019 (9) TMI 1683 - ITAT PUNE] wherein the issue on hand discussed by this Tribunal, wherein we note that the assessee availed similar services from its holding company in USA for which the Vishay Singapore paid the said amount on behalf of other entities situated worldwide and charged without no markup from the assessee as well as from other entities. No disallowance was made in this regard by the respondent authorities in the earlier years. The Tribunal examined the final assessment orders/TPO s orders of earlier years along with the necessary documentation filed by the assessee therein an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting Cost. Regarding foreign exchange gain/loss has been treated as non-operative by the TPO which the Tribunal in assessee s own case we note that held the amount of foreign exchange gain/loss arising out of revenue transactions should be considered as an item of operating revenue/cost for the assessee as well as comparables. Further, the TP adjustment should be restricted to the international transactions and not at entity level transactions. Thus, taking into consideration the above aspects, the PLI of the assessee has been shown as 9.69% under the category of manufacturing activity, but the TPO revised average PLI margin of comparables on PBIT to cost treating forex gain/loss as non-operative at 13.80%. 4. Under the manufacturing activity, the assessee chosen to have four comparables, out of which the TPO/AO included CTR Manufacturing Industries and excluded Gujarat Poly Avx Electronics Limited. The AO/TPO computed PLI margin of the comparables on profit on PBIT to cost treating forex gain/loss as non-operative at 13.80%. Thus, the TPO/AO proposed TP adjustment to an extent of Rs.7,89,06,028/-. The DRP in its direction order dated 17-09-2018 rejected the objections of assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operations up to 60% to 70% from the sale of capacitors and resistors whereas there was no segmental information about manufacturing as well as sale of capacitors and resistors in the annual statement of CTR Manufacturing Industries Ltd. Therefore, in our view CTR Manufacturing Industries Ltd. cannot be a comparable to that of assessee. Hence, it should be excluded from the comparables. Therefore, we direct the AO to exclude the CTR Manufacturing Industries Ltd. from the final list of comparables in the category of manufacturing segments. The ld. AR fairly admitted if this Tribunal considers the exclusion of CTR Manufacturing Industries Ltd as followed in the earlier year 2010-11, the assessee would not prosecute the inclusion of Gujarat Poly Avx Electronics Limited. Since, we have taken a view in the light of this Tribunal order in A.Y. 2010-11 in excluding the CTR Manufacturing Industries Ltd. from the list of comparables, the adjudication of inclusion of Gujarat Poly Avx Electronics Limited is not warranted. I.T. Enabled Services/Back Office Support Services Segment 7. It is agreed by both the parties that the comparability of certain companies in the Back Office Supp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound out, the comparability of other companies cannot be conclusively decided. In view of the fact that the relevant agreement is not available on record, we deem it fit to set-aside the impugned order on this score and remit the matter to the file of AO/TPO. We order accordingly and direct the AO/TPO to first ascertain the precise nature of services rendered by the assessee under the I.T. support services and then examine the comparability or otherwise of the companies challenged in this segment, namely, Informed Technologies India Ltd., Infosys BPO Ltd., B N R Udyog Ltd. (Medical Transcription segment), Accentia Technologies Ltd., Jeevan Softech and R Systems. The ld. AR fairly agreed to it. 8. In the light of the above, the AO is directed to ascertain the nature of services rendered by the assessee and examine the comparability of the companies indicated therein. Accordingly, this issue is remanded the file of AO/TPO for fresh examination. The assessee is liberty to file evidences, if any, in support of its claim. 9. Ground No. 23 raised by the assessee challenging the disallowance of Rs.6,47,15,145/- u/s. 40(a)(i) of the Act made in the final assessment order by the AO i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , disallowed the said expenditure for violation of non-deduction of TDS u/s. 40(a)(i) of the Act. 14. The DRP in its directions vide para 24.2 referred to the discussion made by the DRP in A.Y. 2012-13 in assessee s own case. We note that the DRP while dealing the issue in A.Y. 2012-13 placed reliance in the case of AMD Research Development Center India Pvt. Ltd. reported in TS-649- ITAT-2014 (HYD) which held the payment made to the parent company with the services rendered by the third party, would not mean that the payment is reimbursement and not payment in the nature of royalty. In the case of CGI Information Systems and Management Consultants Pvt. Ltd. reported in TS-519-HC-2014 (KAR) the Hon ble Karnataka High Court held that the payment for intranet facility under cost sharing arrangement is taxable as royalty. In the case of Vertex Customer Management Ltd. reported in (2016) 67 taxmann.com 105 (Delhi-Trib.) it was held that where the assessee received reimbursement from its India entity for use of equipment situated outside India is taxable as royalty in India. The DRP held the facts and circumstances in A.Y. 2014-15 is identical to facts in A.Y. 2012-13 and accordingl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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