TaxTMI 
TaxTMI 
2017 (5) TMI 532
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....r.w.s 154 of the Act. She ought not to have done 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/-. S....
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....ssee's objection is 'only qualitative, and thus is not acceptable. In TPO's view, no two companies 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 ....
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....figure while arriving at the arithmetic mean PLI to 9 companies. In this regard, the assessee's objection is found to be correct. Before the DRP, the assessee has furnished recomputation of PLI of this company as under: Margin Calculation 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 witho....
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....d. 1.00% Shalimar Paints Ltd. 5.00% DIC Coatinqs Limited 10.00% Airthmetic Mean 7.88% +/-5% Variation between ALP and international transaction. 7. Per contra Ld. D.R submitted that the she has reservations to the above computation, however she did not object to the proposition that the 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....
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....ontroverted by the authorities below by a speaking order, we set aside the order's of the assessing officer on this issue and decide the issue in favour of the assessee. Apropos ground no. 6 13. The Ld. A.O has proposed to disallow Rs. 8,16,19,125/- u/s.40(a)(ia) of the I.T. in respect of the following payments: Rent Rs.1,09,71,000/- 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 ho....
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....of the company and the perquisite value of such accommodation provided to him was included in his salary for the purpose of TDS u/s.192.and as the advance was given in the course of business carried on by the assessee addition made by the AD may be deleted. Copy of lease agreement and salary particulars of Mr. Ramkumar were filed. 18. The Ld. DRP directed as under:- The DRP has considered the submissions of the assessee and found that the assessee's claim is not correct. The perquisite value of the residential accommodation is not included in Mr. Ramkumar's salary for A.Y.2007-08. Further, the Lease and Licence Agreement is dated 25.04.2007 for a period of 33 months, whereas the relevant previous year is F.Y.2006-07. Hence, this agreement has no relevance for AY.2007-08. Hence, the AO is correct in computing interest on advance given at 10% for the A.Y.2007-08. The AO should proceed to make additions as proposed. The objection of the assessee is hence rejected. 19. Against the above order assessee is in before us. We have heard both the counsel and perused the records. 20. Ld. Counsel of the assessee submitted that the advance was given in the month of March 200....