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TMI Blog2025 (3) TMI 1081X X X X Extracts X X X X X X X X Extracts X X X X ..... 143(2) of the Act dated 29.08.2011 was issued. Notice under section 142(1) of the Act dated 15.12.2011 along with a questionnaire was issued. Shri Jatinder Singh and Ms. Shweta Kapoor, C.A. & Authorized Representative for appellant/assessee attended proceedings. The company had entered into international transaction with associated enterprises. A reference was made to the Transfer Pricing Officer (TPO) to determine the Arm's Length Price (ALP) of the International Transactions. The TPO passed order dated 29.01.2014 under section 92CA(3) of the Act relating to business support services at Rs. 3,05,42,857/- by making addition of Rs. 83,69,069/-. On completion of assessment proceedings learned AO made additions of Rs. 20,00,04,372/- on account of advance from customers Rs. 7,05,290/- on account of advance written off Rs. 83,69,069/- on account of transfer pricing and Rs. 1,95,53,494/- on account of depreciation vide order dated 30.04.2014. 3. Against assessment order dated 30.04.2014, appellant/assessee preferred appeal before the learned CIT(A), which was partly allowed vide order dated 03.11.2015. 4. Being aggrieved, appellant/assessee preferred present appeal with the following g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he learned CIT(A) has erred in upholding the addition of Rs 83,69,069 to the total income, on account of Transfer Pricing ("TP") adjustments in respect of international transactions of 'commission received with its Associated Enterprise viz. ThyssenKrupp Elevators (Shanghai) Co. Ltd. ("the AE"). 5.1 That the learned CIT(A) has failed to understand the functions performed by the assessee in respect of the transaction of 'commission received'. 5.2 That the learned CIT(A), based on irrelevant considerations, has erred in holding that the assessee has provided 'Technical/ Business Support Services' to the AE, as against 'Business/ Market Support Services' held by the AO on the same facts. 5.3 That the learned CIT(A) has erred in rejecting the comparables filed by the assessee, based on his erroneous observation that the functions performed by the assessee in respect of transaction of commission received are not similar to the functions performed by the comparable, without appreciating that the learned AO had himself considered the terms of agreement with the comparable as of 'Business/ Market Support' provider. 5.4 That the learned CIT(A) has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, etc. in which the assessee is engaged. 6. That the learned CIT(A) has erred in confirming levy of interest u/s 234B, 234C & 234D." 5. Learned Authorized Representative for appellant/assessee submitted that Ground of appeal Nos.1 & 2 are general in nature. 6. Learned Authorized Representative for appellant/assessee regarding ground of appeal nos.3 & 3.1 & 3.2 submitted that learned CIT(A) failed to appreciate that the issue of "advance received from customers' was decided in favour of the assessed for A.Υ. 2005-06, Α.Υ.2006-07, Α.Υ. 2007-08 by the Tribunal. 6.1 This issue is covered in favour of the TKEI by order of Delhi High Court for A.Υ. 2005-06 (Annexed as annexure -1 at Pg. 9-10) and A.Υ. 2006-07 (Annexed as annexure -2 at Pg. 11-12) and A.Υ. 2007-08 (Annexed as annexure -3 at Pg. 13-14). 6.2 This is also covered by ITAT in Assessee's own case for A.Y 2009-10. Copy of Order annexed as Annexure -4 at Pg. 15-34) 6.3 The Hon'ble High Court in assessee's own case for A.Y 2005- 06, 2006-07 and 2007-08 has accepted the accounting treatment given by the assessee to "Advances received from the customers rely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... into by the assessee, which does not constitute revenue/income of the relevant assessment years. Ground No.3.1relates to "advances from Customers" represents initial advance received on signing the contract (Reflected as 'Current Liabilities' in B/S ) Rs. 17.07 crores. Ground No.3.2 pertains to "deferred revenue" represents unadjusted advance received through Progress Billing in the case of new installation and significant modernization jobs, in respect of which revenue is yet to be recognized the basis of on percentage completion method in terms with Accounting Standard(AS-7) (Reflected as deferred revenue in B/S) Rs. 2.9 crores and Ground No.3.3relates to "Deferred Revenue (Maintenance Contracts)" represents unadjusted advance received through Progress Billing in respect of maintenance contracts, the term of which has yet to expire at the end of the relevant financial year. (Reflected as deferred revenue in B/s) Rs. 21.99 crores. 11.1 Learned CIT(A) in para no.4 failed to appreciate that the subject matter of adjudication was decided in favour of the assessee for A.Ys. 2005-06 & 2007-08. Moreover, the issues are covered by order dated 27.09.2024 in ITA Nos.4043 & 3805/Del/2015 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owance to be allowed as business loss as it pertains to revenue field on account of security deposit for participating in tenders. 14. Accordingly, Ground No. 4 of the assessee's appeal is allowed. 15. Ground No.5 pertaining to addition of Rs. 83,69,069/- on account of Transfer Pricing Adjustment. Appellant had undertaken International Transactions with its associate enterprises during the financial year as under: International Transactions during A.Y. 2010-11 International Transaction Method Amount (in INR) Import of Components and spares TNMM 32,541,569/- Export of Components and spares TNMM 128,064/- Import of elevators / escalators CUP, 154,723,184/- Provision of services TNMM 23,970,222/- Agreement with Thyseen Krupp Elevator Australia Pty. Ltd. For installation, testing and commissioning of elevators, escalators & travelators CUP 179,053,589/- Other Transaction CPM 8,332,630/- 15.1 TPO in para no.6 selected 7 comparables companies as comparable for bench marking the transactions as under: Sr. No. Company Name OP/OC 1. Apitco Ltd. 40.09 2. Cyber Media Research Ltd. 14.85 3. Global Procurement Consultants Ltd. 37.19 4. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anies providing market support services to it's AE in the following cases. Reliance is placed on: i) Tech Micro India(Ltd) vs DCTT (2015) 64 taxmann.com462 (Del)(Trib) (Para 7 at pages 46-47 of DPB) ii) Kobelco Cranes India Ltd. vs. ITO [2016) 70 taxmann.com3 (Del-Trib) (Para 8.3 atpgs. 69-70 of DPB) ii) Addidas Technical Services (P.) Ltd. vs. DCIT [2016] 69 taxmann.com 401 (Delhi-Trib) (Para 8.3(a) at pg. 73J of DPB) 2. Global Procurement Consultants Ltd (A.R Pgs. 377-430 of TP Vol-II) This company is also not a fit comparable as its functions are totally dissimilar. Attention is invited to Pg. 384 of TP Vol-11 wherein it is clear that this company is engaged in providing consultancy services and procurement processes in the area of health which is funded by World Bank. This company for same A.Y 2010-11 was excluded by Hon'ble ITAT from the list of comparables as functionally dissimilar to the companies providing market support services to it's AE in the following cases: i) Tech Micro India (Lad) vs DCIT [2015] 64 taxmann.com462 (Del) (Trib)(Para 8 at pages 47-48 of DPB) ii) Hyundai Rotem Company Vs. ACIT [2016] 73taxman.com42 (Del-trib) Para 8 at pg ..... X X X X Extracts X X X X X X X X Extracts X X X X
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