Tribunal instructs Assessing Officer to re-examine issues in appeal, including transfer pricing adjustments.

The appeal filed by the assessee was partly allowed for statistical purposes. The Tribunal directed the Assessing Officer to re-examine and decide on various issues, including the inclusion of a comparable company, treatment of foreign exchange fluctuation losses, working capital adjustments, interest payments on delayed receivables, computation of operating profit margin, and transfer pricing adjustments. The Assessing Officer was instructed to collect necessary details, provide a reasonable opportunity to the assessee, and make decisions in accordance with the law.

---

---

Issues Involved:
1. Inclusion of M/s Suprajit Engineering Ltd. as a comparable company by the Transfer Pricing Officer.
2. Loss on foreign exchange fluctuation.
3. Working capital adjustment for determination of arm's length price.
4. Payment of interest on delayed receivables.
5. Computing the Operating Profit Margin (OPM) of the comparable companies.
6. Downward adjustment on the entire transactions of the assessee instead of the transaction of Associated Enterprise alone.
7. Computation of interest under Section 234A and 234B of the Act.

Issue-wise Detailed Analysis:

1. Inclusion of M/s Suprajit Engineering Ltd. as a comparable company by the Transfer Pricing Officer:
The assessee contested the inclusion of M/s Suprajit Engineering Ltd. as a comparable company, arguing that it engaged in a diversified business catering to both 4-wheeler and 2-wheeler automobile industries, unlike the assessee which only supplied to Hyundai Motors India. The Tribunal noted that segmental details might be available with M/s Suprajit Engineering Ltd. and directed the Assessing Officer to re-examine the issue. The Assessing Officer was instructed to collect segmental details by issuing a notice under Section 133(6) of the Income-tax Act, 1961, and decide the issue afresh in accordance with law, ensuring that the details and information collected are furnished to the assessee before making any decision.

2. Loss on foreign exchange fluctuation:
The assessee argued that the loss on foreign exchange fluctuation should be removed from the operating expenditure. The Tribunal referenced a previous decision in Hanil Tube India Pvt. Ltd., which stated that foreign exchange loss or gain should be excluded from operating income for the purpose of Profit Level Indicator (PLI). Consequently, the Tribunal directed the Assessing Officer to exclude the loss or gain in foreign exchange fluctuation from the operating income for computing PLI.

3. Working capital adjustment for determination of arm's length price:
The assessee sought working capital adjustment for determining the arm's length price. The Tribunal cited a previous decision in Doosan Power Systems India Pvt. Ltd., which mandated such adjustments while computing PLI. The Assessing Officer was directed to find out the working capital of comparable companies and the assessee, potentially issuing a notice under Section 133(6) of the Act, and make necessary adjustments accordingly.

4. Payment of interest on delayed receivables:
The Tribunal noted that in the assessee's own case for the assessment year 2013-14, the actual interest paid was never considered, and thus, there was no reason to interfere with the orders of the lower authorities, which were confirmed.

5. Computing the Operating Profit Margin (OPM) of the comparable companies:
The assessee had filed a Miscellaneous Petition under Section 144 of the Act regarding the computation of OPM while giving effect to the order of the DRP. The Tribunal set aside the orders of the lower authorities and remitted the matter back to the Assessing Officer for re-examination and decision in accordance with law, after providing a reasonable opportunity to the assessee.

6. Downward adjustment on the entire transactions of the assessee instead of the transaction of Associated Enterprise alone:
The assessee argued that only transactions with Associated Enterprises outside the country should be considered for transfer pricing adjustment. The Tribunal referenced the judgment of the Bombay High Court in CIT v. Alstom Projects India Limited, which supported this view, and directed the Assessing Officer to consider only the transactions of the assessee with Associated Enterprises outside the country and compare them with similar transactions by non-Associated Enterprises.

7. Computation of interest under Section 234A and 234B of the Act:
The Tribunal found that the interest computation under Sections 234A and 234B is consequential and mandatory. The Assessing Officer was directed to recompute the interest while giving effect to the Tribunal's order.

Conclusion:
The appeal filed by the assessee was partly allowed for statistical purposes, with several issues remitted back to the Assessing Officer for re-examination and fresh decision-making in accordance with the Tribunal's directions.

---