TaxTMI 
TaxTMI 
2018 (10) TMI 236
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...., UK. The appellant company is engaged in the business of trading of machines used for counting, accepting, sorting and authentication of cash. These machines are primarily used in banks. The Company also renders after sales support and maintenance services to its customers using such machines. 3. The following international transactions u/s 92CA(1) of the Act were referred to the TPO by the ACIT, Circle -1(1), Gurgaon: Sr. No. Transaction Associated Enterprise Arm's length price (as determined by the assessee) (Lacs) Method adopted 1. Purchase of finished Goods De La Rue Cash Systems, UK 102394067 De La Rue Cash Systems Ltd. Wanchai Hong Kong 8905287 De La Rue Cash Systems INC., USA 2544902 DeLaRue SDN BHD, Malaysia 182.900 De La Rue Cash Systems Benelux, Netherland 271030 2. Cross Charges (Received) De La Rue Cash Systems UK 12779478 De La Rue Cash Systems, Dubai 1149323 De La Rue Cash Systems, The Netherlands 1399633 3. Management Charges IS Service Cost Group Insuranc....
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.... by TP O Accepted by DRP NPM Accep ted by TPO Accepted by DRP 1 ACI Infocom Ltd 8.43% Yes Not selected -consistent losses 1.79% No No 3.33% No No 2 CCS Infotech Ltd 0.84% Yes 0.92% Yes -0.02% No No 0.08% No No 3 Compuage Infocom Ltd 2.32% Yes 2.19% Yes 2.51% No Yes 1.62 No No 4 Iris Computers Ltd Not selected- Insufficient 2.31% Information Yes 2.21% No No 1.83 No No 5 Priya Ltd 1.81% Yes 2.38% Yes 3.82% No Yes 2.90 No No 6 CMS Computers Ltd 1.71% Yes 1.24% Yes 17.05% No No -6.50 No No 7 Kilburn Office Automation Ltd 16.52% Yes 20.82 % Yes 15.77% No Yes 17.56 Yes Yes Average 1.29 2.98 8. It would be pertinent to mention here that not only the business profile of the assessee has not changed during the year under appeal, but also the business profile of all the aforesaid comparables is same as the....
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.... dismissed. 15. Though the appellant has relied upon several judicial decisions, but as mentioned elsewhere, we have dismissed this ground on the Rule of Consistency, hence the judicial decisions relied upon by the assessee have not been considered on the facts of the case in hand. 16. In A.Y 2010-11, as mentioned elsewhere, the assessee has taken the forex gain as operating profit but the DRP has treated the same as non operating. Once again, there is a inconsistent approach by the DRP this time. Once it has been decided that forex gain/loss is part of the operating profit, the same view has to be taken for AY 2010-11 also. We accordingly, direct the Assessing Officer/TPO to treat the forex gain in AY 2010-11 as part of operating profit for determination of operating profit margin. Ground No. 2.1(a) of AY 2010-11 is allowed. 17. Ground No. 2.5(b) in A.Y 2009-10 relates to liabilities and provisions written back. 18. The lower authorities have treated the same as non-operating in nature placing reliance on Safe Harbor Rules. The notification of CBDT issued on 18.09.2013 on Safe Harbor Rules define concept of operating expense, operating revenue and operating profit resp....
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....no historical trends were available for making warrantee provision during the year under consideration and since the amount actually utilised is far less than the provisions, the reasonableness of quantum is also not established nor any scientific method has been brought on record by which the said provision amount has been arrived at. Warrantee provision is merely an adhoc provision and, therefore, cannot be allowed. 25. When the above objection was raised before the DRP, the DRP partly allowed the claim for provision of warrantee to the extent of 1.25% of the sales as against the provision made at 5%. 26. Before us, the ld. AR vehemently stated that the warrantee is in-built in the purchase order/agreement and the liability on account of warrantee is integral part of sales Revenue. It is the say of the ld. AR that since the entire sales revenue is accounted as revenue, therefore, corresponding deduction for warrantee provision should also be allowable. The ld. AR further pointed out that on similar facts in assessee's own case, the Tribunal has decided this issue in favour of the assessee in ITA No. 5017/DEL/2012 for A.Y 2007-08. 27. Per contra, the ld. DR strongly suppo....
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....ed as revenue by the assessee. Therefore, corresponding deduction for warrant provision who also be allowed. The Tribunal for A.Y. 2006-07 being ITA No.7056/Del/2010 order dated 02.02.2016 held as under: "6. We have considered the submissions of both the parties and perused the records of the case. We are in agreement with the reasoning given by Ld. CIT(A) for which he has given reasons in his order, ITA Nos. 2671/Del/2013 & 5017/Del/2012 enumerated above. Merely because the assessee had written back the provision in subsequent year cannot be a basis for disallowing the assessee's claim in the current year, particularly when assessee had given specific basis for making this warranty provision. Assessee's claim is fortified by the decision relied upon by Ld. CIT(A). Accordingly, we see no reason to interfere in the order of Ld. CIT(A) on the issue in question. Accordingly, order of Id. CIT(A) is upheld." After looking to the order of the ITAT for Assessment Year 2007-08, the ITAT have dismissed appeal of the Revenues by holding that merely because the assessee had returned back the provisions in subsequent year cannot be a basis for disallowing the assessee....