TaxTMI 
TaxTMI 
2017 (12) TMI 922
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.... only against the share premium account, and is not allowable as revenue expenditure. Further, the A.O also made a disallowance of employees contribution to PF u/s 36(1)(va) r.w.s 2(24)(x) of the IT Act, on the ground that the assessee has not remitted it to the Government account within the due date given in the relevant Act. As regards the international transaction entered into by the assessee with its AE, the A.O required the assessee to produce the relevant transfer pricing document. Since, the assessee company failed to submit the documentation, the A.O considered the data of the assessee pertaining to F.Y 2009- 10 and selected six companies as comparable to the assessee. He arrived that the arithmetic mean of the comparable companies at 31.82% as against 10.16% margin of the assessee. He therefore, made the addition of Rs. 1,65,93,343/- as an adjustment towards ALP. Thereafter, he also considered the assessee's claim of deduction u/s 10A of the IT Act. He requested the assessee to produce the Form No. 56F, duly certified by the statutory auditors certifying the assessee's claim of deduction u/s 10A of the IT Act. Since, the assessee failed to submit the same, he disallowed th....
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....erchem Ltd., reported in 280 CTR 0381 Kerala. 8.1 On the other hand, the Ld. Counsel for the assessee relied upon the various decisions of this Tribunal and also the decision of the Hon'ble Supreme Court in the case of CIV Vs M/s Alom Extrusions Ltd, reported in 319 ITR 306, to support his contentions that the both employee and employees' contribution is allowable u/s 43B as well as 36(1)(va) of the IT Act, if it is paid before the date of filing of the appeal. He also relied upon the following other decisions: "1. Tetra Sof t (India) (P) Ltd Vs. ACIT (2015) [61 taxmann.com 299 (Hyd-Trib)] 2. Vivimed Labs Ltd. Vs. DCIT (2002) [ITA No. 211/Hyd/2010]. 3. CIT Vs Sabari Enterprises (2008 298 ITR 141 Kar. 4. Prithvi Inf ormation Solutions Ltd. Vs ACIT (2014) [34 ITR ( Trib) 429] (Hyd)." 8.2 Having regard to the rival contentions, we find that undisputedly, the employee's contribution to PF has been paid with the delay of ten days only, but before the due date of filing of the return. In a number of cases, this Bench of the Tribunal has considered all the decisions relevant to the issue, both u/s 43B as well as 36(1)(va) r.w.s 2(24)(x) of the Act....
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....) 378 ITR 0443 which has distinguished the decision of the Hon'ble Supreme Court in the case of Alom Extrusions for arriving at a conclusion that the employees contribution is not allowable if it is not paid within the prescribed due date. She also relied upon the decision of the Hon'ble Gujarat High Court in the case of CIT vs. Gujarat State Road Transport Corporation (2014) 57(I)ITCL 72 (Guj. High Court). Therefore, she confirmed the disallowance and the assessee is in second appeal before us. 4. The learned Counsel for the assessee submitted that both the employees and employer's contribution is to be remitted to the Govt. A/c within the prescribed date or before the due date for filing of the return u/s 139(1) of the Act. He submitted that the Hon'ble Supreme Court in the case of Alom Extrusions has held that both the employer's as well as employees contribution which is paid before the due date of filing of return u/s 139 (1) is allowable u/s 43B of the Act. He also relied upon the judgment of the Hon'ble Andhra Pradesh High Court in the case of Hitech(India) (P) Ltd (cited Supra) wherein the constitutional validity of section 43B and explanation to cl....
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....e CIT(A) and the CIT(A) has called for a remand report from the A.O. The A.O has submitted his remand report on 27-01-2014, which has been reproduced at para 7.2 of CIT(A) order as under: "7.2 Further, the A.O vide his remand report dated 27- 1-2014, has submitted as under: With regard to the computation of Arms' Length Price and upward TP adjustment amounting to Rs. 1,65,93,343, it is to submit that the assessee-company during the course of asst. proceedings, has f ailed to relevant Transfer Pricing documentation. Further, the AO has computed the net Operating Prof it Margin based on Cost (%) of the assessee-company at 10.16% and selected the comparable af ter adoption of requisite turnover f ilters and determined the Arithmetic Mean at 31.82%. Thus, the ALP was accordingly worked out and upward d TP adjustment amounting to Rs. 1,65,93,343/- was made. During the course of remand proceedings, the AR of the assessee company has submitted the Transfer Pricing documentation and selected the comparable as shown below and are accordingly reasoned and rejected. S.No Name of the Comparable company Reason for rejection 1 M/s AOK in-house ....
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....M/s Info-Drive Software Limited The comparable company turnover for A. Y.2009- 10 & 2010-11 is Rs. 20.61 & Rs. 21.39 crores whereas the assessee-company turnover for the A. Y.2009-10 & 2010-11 is Rs. 5.63 crores and Rs. 7. 71 crores only. Thus, there is huge difference in turnovers between the comparable selected and the assessee company and as economies of scale influences profitability, hence selection of inappropriate Turnover Filter (1-50 crores) is not acceptable wherein the appropriate Turnover Filter should be adopted at Rs. 1-10 crores and thus the selected comparable falls Turnover Filter and accordingly has to be rejected. 7 M/s International Biotech Park Limited The business of the comparable company is development of Biotechnology Park, which is completely different from the assessee company business of Computer Software Development / IT enabled services. Hence, the comparable falls Basic Industry Selection Filter and accordingly has to be rejected. 8 M/s Technologies Limited The comparable company turnover for A. Y.2009- 10 & 2010-11 is Rs. 19.13 & Rs. 15.85 crores whereas the assessee-company turnover for t....
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....essee are having turnover filter of Rs. 10 crores and above, and that application of appropriate turnover i.e Rs. 1 to 10 crores is necessary to identify suitable comparables as economies of scale influence profitability of a company. He observed that out of the 9 comparable company selected by the assessee companies, 8 companies are to be rejected due to inappropriate selection and application of turnover filter. He therefore requested the CIT(A) to refer the matter to TPO for determination. In reply to the remand report, the assessee submitted that the assessee has taken turnover filter of Rs. 1 to 50 crores, as the assessee was having a turnover of Rs. 1.56 crores and 7.71 crores for the A.Ys 2009-10 and 2010-11 respectively and justified the comparables selected by it. The CIT(A) accepted the assessee's contentions and deleted the addition made an account of TP adjustment. 9.2 The Ld. DR submitted that, the assessee has not submitted the TP documentation before the A.O but has submitted it before the CIT(A) and if the assessee has not selected appropriate comparables, then, the CIT(A) ought to have remanded the matter to the TPO, since the TPO was the competent authority to ....