TMI Blog2023 (5) TMI 107X X X X Extracts X X X X X X X X Extracts X X X X ..... he legal contentions raised in favour of the assessee. Since the TP adjustment is quashed on the basis of legal issue, we are not adjudicating the grounds raised with regard to TP adjustment on merits leaving them open. It is ordered accordingly. Disallowance of difference in 26AS - difference between the amount remitted as per Form 26AS and the revenue declared by the assessee in the Profit Loss account - HELD THAT:- AR submitted that the difference between the revenue as per Form 26AS and the P L account were reconciled and made the relevant submissions before the DRP (Ground No.10 in Form 35) and these submissions have not been considered on merits by the lower authorities and therefore prayed for remitting this issue back to the AO. DR did not have any objection. Accordingly, we remit this issue back to the AO to consider the reconciliation submitted by the assessee and decide the issue in accordance with law after giving reasonable opportunity of being heard. This ground is allowed for statistical purposes. Disallowance of TDS credit - HELD THAT:- We are of the considered view that the fact of whether tax is claimed as deduction in the year in which the income is o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see had international transactions, a reference was made to the TPO. The TPO rejected the method adopted by the assessee and accordingly made an adjustment of Rs.3,29,82,771. The AO passed the draft assessment order including the TP adjustment. The AO while passing the draft assessment order made addition towards difference in the revenue between Form 26AS and the profit and loss account of the assessee to the tune of Rs.1,03,61,430. The AO also denied the benefit of credit of TDS to the tune of Rs.31,69,801 to the assessee in the draft order. The assessee filed its objections before the DRP. The DRP issued directions directing the TPO/AO to rework the transfer pricing adjustment with respect to international transactions pertaining to Engineering Design services segment and sale of finished goods to AE. The DRP confirmed the additions made by the AO on the corporate tax front. The AO passed the final assessment order against which the assessee is in appeal before the Tribunal. 5. The assessee raised 8 grounds contending the TP adjustment on merits. The assessee also raised 2 grounds with regard to corporate tax disallowance. The assessee raised one additional ground contending ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ducts to AE 78,83,334 2. Provision for Engineering services 2,53,844 3. Reimbursement of expenses 2,48,45,593 Total 3,29,82,771 11. The AO incorporated the above adjustment and passed draft assessment order on 28.3.2016. Aggrieved by the same, the assessee filed objections before the DRP and directions were issued by DRP on 22.12.2016. The ld. DRP while passing its directions with respect to transfer pricing adjustment pertaining to Engineering design services, directed the AO/TPO to exclude certain comparable companies selected by the TPO in the final set. Further, it also directed the TPO to rework the transfer pricing adjustment with respect to the international transaction pertaining to sale of finished products to AEs. 12. The ld. AR submitted that the AO passed the final assessment order which is not in conformity with the DRP directions. The relevant paragraph of the final assessment order is reproduced herein below:- 2.3 Accordingly, a draft assessment order was passed u/s 143 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ALP Sale G = F+B 9,93,47,23,335 Difference H = G-A 60,78,12,945 Sales to AE I 12,09,70,294 % of AE sales to total sales J = I/A 1.2970% ALP adjustment at transaction level K = J*H 78,83,334 17. With regard to Engineering Design services, the TPO conducted his own search to select the following comparables and arrived at an average margin of 24.22% as under:- OP/OC OP/OR S.No. Company Name 2012-13 2012-13 1. Cades Digitech Pvt. Ltd,[Merged] 2.92% 2.84% 2. Holtec Consulting Pvt. Ltd. 59.00% 37.11% 3. I-Design Engineering Solutions Ltd. 16.89% 14.45% 4. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the assessee the DRP, with regard to the comparables in Engineering Design services segment, held that :- 5.2 However, the specific objections of the assessee regarding the comparables selected by the TPO were examined. As regards Holtec Consulting Private Limited, the assessee claims that it is functionally different_ From the financials of the company it is seen that in para 12 of the Director's report the function of the company is mentioned as primarily engaged in the business of rendering engineering consulting services. It also mentions that there is no requirement of any segment reporting, hence, the company is found to be functionally comparable to the assessee, and the objection of the assessee is not accepted. Tractabel Consulting Engineers Private Limited is into consulting services in project management and industrial engineering segments. Therefore, tinder TNNM, there is no infirmity in selection of this company as a comparable. M/s. Onward Technologies Limited is found to be in the area of EDS and IT consulting services and hence, comparable to assessee. As regards the objection of the assessee about this company having intangible assets. it is found tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o directed for the exclusion of M/s. Sirea India Private Ltd. This would mean that the TP adjustment should be recomputed and thus should undergo change. This is supported by the fact that the jurisdictional AO in the OGE to the directions of the DRP dated 28.2.2022 has revised the TP adjustment to Rs.31,38,49,565. However, in the final assessment order passed by NFAC on 11.02.2011 which is passed prior to TPO s order dated 15.2.2022 revising the TP adjustment, the AO has retained the same TP adjustment amount as in the draft assessment order by observing that the DRP has confirmed the addition made by the TPO. From these facts, it becomes clear that the final assessment order passed by the NFAC to the extent of TP adjustment is not in accordance with the directions of the DRP and to this extent, the TP adjustment is quashed. 13. We see merit in the contention that the jurisdictional AO has become functus officio once the final assessment order is passed and that there is no authority for him to pass any order modifying the final assessment order. We therefore hold that the order dated 28.02.2022 passed by the jurisdictional AO giving effect to the revised TP adjustment is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o offer income assessable in a particular year in any subsequent year as per its convenience. 26. In this regard, the ld. AR submitted that the difference between the revenue as per Form 26AS and the P L account were reconciled and made the relevant submissions before the DRP (Ground No.10 in Form 35). The ld. AR submitted that these submissions have not been considered on merits by the lower authorities and therefore prayed for remitting this issue back to the AO. The ld. DR did not have any objection. Accordingly, we remit this issue back to the AO to consider the reconciliation submitted by the assessee and decide the issue in accordance with law after giving reasonable opportunity of being heard. This ground is allowed for statistical purposes. Disallowance of TDS credit 27. During the course of hearing, the AO observed that the assessee has claimed TDS for an amount of Rs.31,59,801 and the corresponding income has not been offered to tax. Therefore the AO did not give credit for the TDS to this extent. The DRP on further objections, confirmed the same. 28. In this regard, the ld. AR submitted that the assessee had claimed tax credit on such income in the year ..... X X X X Extracts X X X X X X X X Extracts X X X X
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