TaxTMI 
TaxTMI 
TaxTMI 
2017 (5) TMI 532
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....ne so. 3. Without prejudice to ground No.1 and 2, the learned assessing officer ought to have restricted the transfer pricing adjustment to Rs. 4,18,04,000/- following the directions of the learned DRP. 4. On the facts and circumstances of the case and in law, the learned Assessing officer has erred in making an addition on account of Modvat under section 145A of the Act to the extent of Rs. 9,49,968/-. She ought not to have done so. 5. Without prejudice to ground No.4, on the facts and circumstances of the case and in law, the learned Assessing officer ought to be directed to allow deduction in respect of Modvat credit relating to opening inventory and not to make adjustment in the form of addition of modvat credit relating to closing inventory. 6. On the facts and circumstances of the case and in law, the learned Assessing officer has erred in making an addition of Rs. 8,16,19,125/- u/s 40(a)(ia) of the Act. She ought not to have done so. 7. On the facts and circumstances of the case and in law, the learned Assessing officer has erred in making an addition on account of Interest free deposit/advance of Rs. 2,50,000/-. She ought not to have done so. 8. Your appellant c....
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.... are identical, and there may be some dissimilarities in operation, but it has to be seen whether such dissimilarities are material to exclude such companies with the comparable selected by assessee's own robust search. Accordingly, the TPO has included these 2 companies in the list of comparable. Accordingly, the TPO has identified 9 companies under: Comparable Companies Comparable Operation PBIT / Sales as S.no Comparable Companies Comparable introduced by Operation Margin as per assessee PBIT / Sales as Per TPO (%) 1 Asian Paints Industrial Assessee 2.73% 4% 2 Berger Paints India Ltd. Assessee 7.23% 8% 3 D I C India Ltd. Assessee 4.15% 5% 4 I C I India Ltd. Assessee 7.19% 54% 5 Organic Coatings Ltd. Assessee 1.10% 1% 6 Shalimar Paints Ltd. Assessee 4.00% 5% 7 Asian Paints Ltd. TPO 10.85% 12% 8 D I C Coatings Limited TPO 10.52% 10% 9 Goodlas Nerolac Paints Ltd. (Now Kansai Nerolac Paints) TPO 9.22% 11% Average 6.33% 12.22% 3.4 The comparables (including D I C Coatings India Ltd.) include 6 companies identified by the assessee itself. The TPO has proposed to adopt the average PLI (PBIT / Sales) of 9 comp....
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....on of I C I India Ltd. CPLI = PBIT / Revenue - without prejudice) ICI India Limtied March 2007 Total Revenue 954.32 PBT 140.11 Add: Interest 2.29 PBIT 142.4 PBIT / Revenue 14.92% This is after excluding the non-operating income and non-operating expenses as verified from the accounts. TPO has to verify this computation. (f) By adopting the PLI of ICI India Ltd. at 14.92% the arithmetic mean of PLI for 9 companies is arrived at 7.88% by the assessee which is prima facie found to be correct. Assessee's contends that adopting such modified arithmetic mean PLl of 9 companies @ 7.88%, the TP adjustment works out to Rs. 4,18,04,OOO/- only. TPO j AO is directed to verify the correctness of figures and recompute the TP adjustment/addition accordingly. (g) The TPO is correct in his approach as he has followed sub-rule (2) of Rule 10B and Sub Rule 10B (4). Hence, assessee's contentions are without merit and hence, rejected. (h) The TPO is correct in not allowing (+/-) adjustment as per Proviso to Sec.92C(2) claimed by the assessee, the DRP is of the view that there is no need to allow such relief as it is allowable only when assessee makes adjus....
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....e issue may be remitted to the file of the A.O to verify the veracity of the computations, now being submitted by the Ld. Counsel of the assessee. 8. Upon careful consideration we are of the considered opinion that the issue in this case needs to be remitted to the file of the A.O. The A.O shall consider the workings given by the Ld. Counsel of the assessee in the light of the order passed u/s. 154 of the Income Tax Act along with the directions of the dispute resolution panel. Thereafter the A.O shall decide as per law after giving the assessee proper opportunity of being heard. Apropos ground no. 4 and 5 9. Brief facts on this issue are that it is claimed by the assessee that AO should have allowed deduction in respect of modvat credit relating to opening inventory without making any adjustment to the closing inventory. It is also claimed by the assessee that assessee is following exclusive method of accounting in respect of mod vat credit on purchases of raw materials as prescribed by the Accounting Standard - 2 issued by the Institute of Chartered Accountants (ICAI) and also in accordance with the directions of lTAT Mumbai Bench in the case of Hawkings Cookers Ltd. Vs. ITO,....
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....00/- Professional Services Rs. 37,47,000/- Freight, Packing and Handling Charges Rs.3,35,67,000/- Royalty Rs.2,17,72,000/- Purchase of Service from holding company Rs. 5,91,125/- Rs.8,16,19,125/- In response to the AO's query, the assessee's claimed that in clause 27 of the Tax Audit Report, it is reported that assessee has complied with the provisions of TDS (Chapter XVII-B) under the Act, and also claimed that in case any disallowance is proposed it may be made on estimate basis subject to rectification. As the assessee was unable to furnish any evidence to support its claim of compliance to the provisions of TDS in respect of the above payments, AO has disallowed the total amount of such payments of Rs. 8,16,19,125/- u/s.40a(ia) of the ACT. 14. The Ld. DRP noted that assessee has how furnished details included Xerox copies of TDS payment challans. The Ld. DRP directed as under:- The Ld. DRP has considered the assessee's claim on merits. While the assessee has not furnished such details of TDS made and computation thereof, before the A.O the same were filed, during the course of the hearing before the DRP. Considering that the assessee has ....