TaxTMI 
TaxTMI 
2019 (5) TMI 533
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....47,84,57,080/-. The return was processed under section 143(1) of the Act and the case was subsequently taken up for scrutiny for this Assessment Year. The Assessing Officer (AO) made a reference to the Transfer Pricing Officer (TPO) under section 92CA of the Act for determination of the arms length price (ALP) of the international transactions entered into by the assessee with its Associated Enterprises (AE) during the year under consideration. The TPO passed an order under section 92CA of the Act dated 30.01.2014 proposing TP adjustments totally amounting to Rs. 65,45,44,303/0; comprising (i) an adjustment of Rs. 38,84,32,314/- in respect of sale of finished goods and (ii) an adjustment of Rs. 26,61,11,989/- for advertisement, marketing and sales promotion (AMP) activity. The AO completed the draft order of assessment under section 143(3) of the Act vide order dated 08.03.2014, wherein the assessee's income was computed at Rs. 115,63,22,141/-, in view of, inter alia, the TP adjustments of Rs. 65,45,44,303/- and disallowance of interest paid under section 36(1)(iii) of the Act amounting to Rs. 2,91,89,882/-. 2.2 The assessee filed its objections to the additions / disallowances ....
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....dentical TP adjustments were deleted by the Co-ordinate Bench. It was submitted that the facts of the case, the basis of and reasons for making TP adjustments are identical for the year under consideration as compared to Assessment Year 2011-12 and therefore the decision is squarely applicable for this year i.e., Assessment Year 2010-11 also. 6.3 Per contra, the learned DR for Revenue vehemently supported the TPO's order in making the impugned TP adjustments. 6.4.1 We have considered the rival contentions and submissions and perused the material on record; including the judicial pronouncements cited. The assessee firm is engaged in the business of manufacture and sale of (a) herbal pharmaceutical products; (b) consumer and personal care products; and (c) animal health care products. The manufactured products (supra) are sold both in India and are also exported to AEs / entities outside India to related parties and also to unrelated parties in CIS countries. In India pharmaceutical / ayurvedic products are driven by prescription of Doctors and so also in CIS Countries. However, in other countries, the international business for these products is l....
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....ssee acted as a contract manufacturer in respect of products manufactured and exported to the AEs as it did not undertake the distribution, advertisement, marketing and selling expenditure and held that the goods are sold at a mark up of 15% on cost. The TPO then computed the TP adjustment in respect of sale of finished goods at Rs. 38,84,32,314/- as per the working extracted hereunder:- 6.4.5 We find that the facts of the case, and the basis and reasons for making the aforesaid TP adjustment of Rs. 38,84,32,314/- on account of sale of finished goods are identical to the facts of the case for Assessment Year 2011- 12. The grounds raised and the contentions / arguments put forth are also similar to Assessment Year 2011-12. The Co-ordinate Bench in the assessee's own case in its order in IT(TP)A No.807/Bang/2016 dated 04.07.2018 for Assessment Year 2011-12 at paras 8.5.1 to 8.5.16 has held as under: "8.5.1We have heard the rival contentions, perused and carefully considered the material on record; including the judicial pronouncements cited. The first issue for consideration is that of what would be the MAM in the facts and circumstances in the case on hand. As per Sec. 9....
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....nterprise in respect of property transferred to an AE is increased by the 'adjusted profit mark up' to determine the ALP. The 'adjusted profit mark up' is determined by making adjustments to 'normal gross profit mark up' to take into account the functional and other differences, if any, between the international transaction and the comparable uncontrolled transactions OR between the enterprises entering into such transactions, which could materially affect such profit mark up in the open market. The 'normal gross profit mark up'means the gross profit mark up on direct and indirect costs of production arising from the transfer of the same OR similar property by the enterprise or by an unrelated enterprise, in a comparable uncontrolled transaction ORa number of such transactions. 8.5.4 In the case on hand, the assessee compared the net profit margin from domestic consumer product division with the net profit margin for exports to AEs. At page 46 of his order, the TPO has held that the exports to AEs is comparable in terms of nature of goods to the domestic consumer product division and therefore this section is considered as comparable to exports to AEs. Thus, there is no di....
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....ed considering a net margin of 15% on the estimated costs. 8.5.6 In our considered view, the TPO has completely disregarded the above important differences in functions performed, assets employed and risks undertaken by the domestic consumer product division and export to AEs; the pricing policy followed by the assessee due to these differences in both segments. In this view of the matter, we are of the considered opinion that the TPO's approach, in applying the gross profit margin of the domestic consumer product division to the cost of goods sold in exports to AEs to determine the ALP, is factually erroneous and contrary to the mandate of Rule 10B(1)(c) of the Rules. 8.5.7 As per Rule 10B(2), the comparability of an international transaction with an uncontrolled transaction shall be judged with reference to the following namely :- "(a)the specific characteristics of the property transferred or services provided in either transaction; (b)the functions performed, taking into account assets employed or to be employed and the risks assumed, by the respective parties to the transactions; (c)the contractual terms (whether or not such terms a....
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.... and abroad, support of doctors and Govt. of India and abroad, etc. were explained before the TPO. The assessee also submitted that if CPM is considered as the MAM, then the gross profit margin earned in the domestic market should be reduced on account of the many/ various differences like, freight to move goods to the sales depots and subsequently to the stockists, commission to C&F Agents through whom the sales are achieved, filed staff salaries, sales commission to employees, travelling cost to promote and achieve sales all over India, communication charges, brand premium, allowances for negative publicity in the international market, etc. 8.5.9 Rule 10B(1)(c) r.w. Rule 10B(3) provides for making reasonably accurate adjustments to eliminate the material effects of differences between transactions being compared. In the case on hand, from the details on record, the differences between domestic sales and export sales are large in number and some being qualitative, unless reasonably accurate adjustments are made to normal gross profit mark up to eliminate the material effects of the many differences between domestic sales and export sales, the two margins cannot be compare....
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.... 8.5.10 Similarly, the ITAT, Pune Bench in the case of Alfa Lavel (I) Ltd. Vs. DCIT (2014) 46 taxmann.com 394 (Pune -Trib), rejected CPM as the MAM. In its decision in that case, where the assessee was engaged in the business of manufacture and sale of various industrial products such as decanters, separators, etc. to its AE located abroad as well as in the domestic sector, in view of the fact that there were various differences in export segment and domestic segment, such as market fluctuations, geographic differences, volume difference, credit risk, RPT, etc., the Bench held that the TPO was not justified in adopting CPM as the MAM as suitable adjustments are not possible. 8.5.11 The learned Departmental Representative for Revenue placed reliance on the decision of the Delhi Bench of ITAT in the case of Wrigley India (P) Ltd. Vs. Addl. CIT (2011) 14 taxmann.com 91 to put forward the proposition that CPM should be considered as the MAM for manufacture and sale of finished goods in the domestic markets and exports to AEs. In fact, in this decision (supra), the Tribunal held that 'since the marketing and advertisement expenditure has to be also incurred by the AEs to ....
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....s Method is the most appropriate method. In this view of the matter and in view of the detailed discussion by the learned CIT(A), we hold that the Cost Plus Method (CPM) is the most suitable method for the international transactions with AEs in the instant case." In this decision (supra), the Tribunal accepted CPM as the MAM considering the fact that the assessee was not able to satisfactorily explain the substantial difference in the FAR analysis in respect to exports to AEs and non-AEs and therefore did not accept that comparison should be made at the operating level using the net operating margin. In the case on hand, however, the assessee has brought on record many functional, quantitative and qualitative differences between the domestic consumer product division and the exports to AEs. As discussed earlier, reasonably accurate adjustments cannot be made in the case on hand to determine the adjusted profit mark up as per Rule 10B(1)(c) and therefore CPM cannot be considered as the MAM. Consequently, the aforesaid decision relied on by the learned Departmental Representative is not applicable to the facts of the case on hand. 8.5.13 The OECD, TP Guidelines, 201....
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.... net margin derived in similar international transactions. Thus, TNMM removes the limitations of other methods and since the comparison is made at the net profit level, it is the only method where comparison is possible when there are differences in the transactions and further making reasonable adjustments to the comparable transaction is impossible. The Hon'ble Delhi High Court 17 the case of Sony Ericcson Communications India P. Ltd. Vs. CIT (2015) 55 taxman.com 240 held that the TNMM is a preferred TP Method determination of ALP of international transactions for its proficiency, convenience and reliability and in TNMM preference should be internal or in-house comparables; as held in paras 89 and 90 thereof:- " 89. The TNM Method has seen a transition from a dis favoured comparabe method, to possibly the most appropriate Transfer Pricing method due to ease and flexibility of applying the compatibility criteria and enhanced availability of comparables. Net profit record/data is assessable and within reach. It is readily and easily available, entity-wise in the form of audited accounts. The TW Method is a preferred transfer pricing arm's length principle for its p....
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.... exported to AEs since the products are sold to AEs at cost plus 15% and the assessee does not undertake any other functions. The OECD, TP Guidelines, 2010 explain the meaning of contract manufacturing with an example wherein a 100% subsidiary company assembles products (a) at the expense/risk of the holding company; (b) based on all necessary component, know how provided by the holding company (c) based on guarantee provided by the holding company for purchase of products. The OECD, TP Guidelines further states that in contract manufacturing, the producer may get extensive instructions about what to produce, in what quantity and of what quality and therefore in such circumstances, the producing company bears low risk. The Guidelines also provide that a contract manufacturer under control of principal, manufactures the product on behalf of the principal, using technology that belongs to the principal, where purchase of the products manufactured and remuneration are guaranteed by the principal, irrespective of whether and if so at what price the principle is able to re-sell the product. 9.2 In the case on hand, the products involved are standard goods manufactured by the as....
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.... from exports to its AEs whereas the net loss suffered by the assessee in respect of the personal care division in the domestic segment is (-) 10.16%. As the net margins from the assessee's exports to its AEs is higher when compared to the result of its margins in respect of transactions in the personal care division in the domestic segment, the price of the sale of finished goods are at arms length. In this factual view of the matter, the TP Adjustment of Rs. 38,84,32,314/- made by the TPO by adopting CPM as the MAM is accordingly deleted. Consequently, grounds 5 to 7 are disposed off as above. 7. Ground No.8 7.1 In this ground (supra), the assessee contends that it be allowed the benefit of the second proviso to section 92C(2) of the Act. In the course of proceedings, it was fairly submitted by the learned AR of the assessee that the assessee's ground is untenable and we therefore dismiss the ground No.8 raised by the assessee. 8. Ground No. 9 - TP Adjustment on AMP Expenditure 8.1 In this ground (supra) the assessee challenges the TP adjustment made / upheld by the authorities below in respect of Advertisement, Marketing, sales promotion (AMP) activity. The learned A....
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....t, the assessee-company has been throughout contesting before all the authorities the very existence of international transaction on account of incurring AMP expenditure between assessee-company and its AE and therefore, the contentions that the law laid down by the Hon'ble Delhi High Court in Sony Ericsson Mobile Communication India (P) Ltd. (supra) should be applied to the case on hand, is not correct. Therefore, the submission of the learned Departmental Representative that the matter be remanded to the file of TPOD for fresh decision in the light of law laid down by the Hon'ble Delhi High Court in the case of Sony Ericsson Mobile Communication India (P) Ltd.(supra), cannot be acceded to.20. Subsequent to the decision in the case of Sony Ericsson Mobile Communication India (P) Ltd.(supra), the Hon'ble Delhi High Court had rendered five decisions on the same issue. Those decisions are (i) Maruti Suzuki India Ltd. Vs. CIT (282 CTR 1), (ii) CIT vs. Whirlpool of India Ltd. (129 DTR (169), (iii) Bausch & Lomb Eyecare (India) (P) Ltd. Vs. Addl.CIT (129 DTR 201) and (iv) Yum Restaurants (India) Pvt. Ltd. Vs. ITO (ITA No.349/2015 dated 13/01/....
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....een considered in these two judgments. 53. A reading of the heading of Chapter X ["Computation of income from international transactions having regard to arm's length price"] and Section 92 (1) which states that any income arising from an international transaction shall be computed having regard to the ALP and Section 92C (1) which sets out the different methods of determining the ALP, makes it clear that the transfer pricing adjustment is made by substituting the ALP for the price of the transaction. To begin with there has to be an international transaction with a certain disclosed price. The transfer pricing adjustment envisages the substitution of the price of such international transaction with the ALP. 54. Under Sections 92B to 92F, the pre-requisite for commencing the TP exercise is to show the existence of an international transaction. The next step is to determine the price of such transaction. The third step would be to determine the ALP by applying one of the five price discovery methods specified in Section 92C. The fourth step would be to compare the price of the transaction that is shown to exist with that of the ALP and make the TP adjustment by....
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.... two parties. Therefore for the purposes of the 'means' part of clause (b) and the 'includes' part of clause (c), the Revenue has to show that there exists an 'agreement' or 'arrangement' or 'understanding' between BLI and B&L, USA whereby BLI is obliged to spend excessively on AMP in order to promote the brand of B&L, USA. As far as the legislative intent is concerned, it is seen that certain transactions listed in the Explanation under clauses (i) (a) to (e) to Section 92B are described as an 'international transaction'. This mightbe only an illustrative list, but significantly it does not list AMP spending as one such transaction. 58. In Maruti Suzuki India Ltd. (supra) one of the submissions of the Revenue was: "The mere fact that the service or benefit has been provided by one party to the other would by itself constitute a transaction irrespective of whether the consideration for the same has been paid or remains payable or there is a mutual agreement to not charge any compensation for the service or benefit." This was negatived by the Court by pointing out: "Even if the word 'transaction' is given its widest connotation, a....
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.... of the target company. It is another matter that the common objective or purpose may be in pursuance of an agreement or an understanding, formal or informal; the acquisition of shares etc. may be direct or indirect or the persons acting in concert may cooperate in actual acquisition of shares etc. or they may agree to cooperate in such acquisition. Nonetheless, the element of the shared common objective or purpose is the sine qua non for the relationship of "persons acting in concert" to come into being." 60. The transfer pricing adjustment is not expected to be made by deducing from the difference between the 'excessive' AMP expenditure incurred by the Assessee and the AMP expenditure of a comparable entity that an international transaction exists and then proceeding to make the adjustment of the difference in order to determine the value of such AMP expenditure incurred for the AE. In any event, after the decision in Sony Ericsson (supra), the question of applying the BLT to determine the existence of an international transaction involving AMP expenditure does not arise. 61. There is merit in the contention of the Assessee that a distinction is required....
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....ansaction will have to be established de hors the BLT. ........... 70. What is clear is that it is the 'price' of an international transaction which is required to be adjusted. The very existence of an international transaction cannot be presumed by assigning some price to it and then deducing that since it is not an ALP, an 'adjustment' has to be made. The burden is on the Revenue to first show the existence of an international transaction. Next, to ascertain the disclosed 'price' of such transaction and thereafter ask whether it is an ALP. If the answer to that is in the negative the TP adjustment should follow. The objective of Chapter X is to make adjustments to the price of an international transaction which the AEs involved may seek to shift from one jurisdiction to another. An 'assumed' price cannot form the reason for making an ALP adjustment." 71. Since a quantitative adjustment is not permissible for the purposes of a TP adjustment under Chapter X, equally it cannot be permitted in respect of AMP expenses either. As already noticed hereinbefore, what the Revenue has sought to do in the present case is to resort to....
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....imited to the nature of the industry, the geographical peculiarities, economic trends both international and domestic, the consumption patterns, market behaviour and so on. A simplistic approach using one of the modes similar to the ones contemplated by Section 92C may not only be legally impermissible but will lend itself to arbitrariness. What is then needed is a clear statutory scheme encapsulating the legislative policy and mandate which provides the necessary checks against arbitrariness while at the same time addressing the apprehension of tax avoidance." 64. In the absence of any machinery provision, bringing an imagined transaction to tax is not possible. The decisions in CIT v. B.C. Srinivasa Setty (1981) 128 ITR 294 (SC) and PNB Finance Ltd. v. CIT (2008) 307 ITR 75 (SC) make this position explicit. Therefore, where the existence of an international transaction involving AMP expense with an ascertainable price is unable to be shown to exist, even if such price is nil, Chapter X provisions cannot be invoked to undertake a TP adjustment exercise. 65. As already mentioned, merely because there is an incidental benefit to the foreign AE, it cannot be said th....
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....rofit cost to the total operating cost was adopted as Profit Level Indicator which means that the AMP expenditure was not considered as a part of the operating cost. This goes to show that the AMP expenditure was not subsumed in the operating profitability of the assessee-company. Therefore, in order to determine the ALP of international transaction with its AE, it is sine qua non that the AMP expenditure should be considered as a part of the operating cost. Therefore, we restore the issue of determination of ALP, on the above lines, to the file of the AO/TPO. The grounds of appeal raised by the assessee-company on this issue are partly allowed." 11.4.2 In the case on hand, the TPO has made the Transfer Pricing Adjustment in respect of AMP expenses on the ground that the said expenditure has resulted in promotion of the brand 'Himalaya' owned by M/s. Himalaya Global Holdings Ltd., Cayman Islands and has applied the 'Bright Line Test 'for this purpose. However, neither the TPO nor the Assessing Officer has brought on record any material evidence to substantiate the existence of any agreement or arrangement, either express or implied between the assessee and 'HGH', Cayman Is....
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....tional transaction has not been satisfied in the case on hand. In fact, it is not the case of the TPO that there exists an arrangement between the assessee and 'HGH' to promote the brand by incurring AMP expenses. The case of the TPO is that the AMP expenditure incurred by the assessee has resulted in a benefit to the legal owner of the brand and the logo, i.e. M/s. Himalaya Global Holdings, Cayman Islands. The contentions of the TPO that the foreign AE has benefitted on account the AMP expenditure incurred and therefore the AMP expenditure cannot be said to have been incurred by the assessee for its own business, etc. have been rejected by the Hon'ble Delhi High Court. In the case of Sony Ericsson India P. Ltd. (supra), the Hon'ble Delhi High Court at para 121 of its order observed that there is nothing in the Act on Rules to hold that it is obligatory that AMP expenses must be necessarily be subjected to the 'Bright Line Test' as this would amount to adding words in the statute and Rules and introducing a new concept which has not been recognized and accepted as per the general principles of international taxation accepted and applied universally. In the case of Maruti Su....
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....pect of personal care product division in the domestic argument at 11.30%. In the factual matrix of the case, as discussed above, the ALP of the assessee's international transactions with its AEs were at Arm's Length and therefore no separate adjustment for AMP expenditure is called for. We, consequently hold that the Transfer Pricing Adjustment of Rs. 31,69,02,034 made by the TPO in respect of AMP expenditure is to be deleted. Ground No.XI is accordingly allowed." 8.3.3 In our view, the aforesaid findings of the Co-ordinate Bench in the assessee's own case for Assessment Year 2011-12 (supra) are squarely applicable for the year under consideration as the facts, basis and reasons for the TPO making the 'AMP' adjustment is identical to that of the earlier year, and, therefore, respectfully following the same, we delete the TP Adjustment of Rs. 26,61,11,989/- made on account of AMP expenditure. Further, as the net margin from the assessee's exports to AEs at 13.39% is higher as compared the net loss of (-)10.16% from the personal care division in the domestic segment, the assessee's international transactions with its AEs are at arms length and therefore no separate adjustment....
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....onditions laid down in the proviso to section 36(1)(iii) of the Act is not satisfied. The learned AR also contended that the interest expenditure was in respect of a facility in an already existing factory building and argued that it was only an expansion of the existing business and therefore the proviso to section 36(1)(iii) of the Act would not be applicable or attracted in the case on hand. In this regard, inter alia, the learned AR placed reliance on the decisions of the ITAT - Hyderabad Bench in the case of ITW Signode India Ltd., Vs. DCIT (2007) 110 TTJ 170 and of the ITAT - Delhi Bench in the case of AT & T Global Network Services (India) (P) Ltd., Vs. DCIT (2017) 86 taxmann.com 158. 9.3 Per contra, the learned DR for Revenue relied on the findings in the order of assessment and contended that the AO was justified in making the impugned disallowance. 9.4.1 We have considered the rival contentions and carefully perused the material on record; including the judicial pronouncements cited. For Assessment Year 2009-10, the AO disallowed the interest expenditure of Rs. 3,12,25,891/- for the similar reason that the said expenditure relates to the period prior to the date on ....
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....e assessee has extended its "Operations from the present activity to another activity. On the other hand, the latter indicates that the assessee has merely expanded its present operations. The expansion is generally meant to be the expansion of its present installed capacities. The capacity may be expanded either at the same location or at a different location. But the legislature has not used the word "expansion" and that is with a purpose. If there is merely an expansion, then it may not be necessary for the assessee to incur the type of expenditure envisaged in s. 35D. On the other hand, if there is extension or where altogether a new industrial unit is set up, such extension or setting up of a new unit may be preceded with the preparation of a feasibility report or. a project report or conducting market survey and so on. These preliminary expenses are envisaged in s. 35D for the reason that the extension or setting up of a new unit presupposes that the assessee is entering into altogether a new line of activity or is setting up an undertaking which is independent of the present undertaking. With this background, let us consider the facts of the present case. 7. The ass....
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....that though the expenses may have enduring benefit, no estimate can be made about the period for which the assessee may be benefited. Therefore, on these grounds, the Tribunal allowed the expenditure. The assessee's case in the present appeal is on a much better footing insofar as that the assessee has not launched any new product worth its name. The production of Edge Board which is a new product introduced during the year is too insignificant to be considered. Thus, considering the overall facts of the case, we do not see any reason to apply the provisions of s. 35D. The AO is directed to allow full deduction of the expenditure as claimed by the assessee." 9.4.3 Similarly, the ITAT - Delhi Bench in the case of AT & T Global Services (India) P Ltd., Vs. DCIT (2017) 86 taxmann.com 158 (Delhi - Trib); relying on the decision of the Hon'ble Apex Court in the case of DCIT Vs. Gujarat Alkalies & Chemicals Ltd., (2008) 299 ITR 85; at para 18 thereof has held as under:- "18. ______ ..............................The word "extension" has not been defined in the Income-tax Act, 1961 and one has to resort to the popular meaning of the term. The dictionary meaning of the word ....
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....he above cited judicial pronouncements. In the factual matrix of the case and in the light of the Tribunal decisions cited and considered (supra), we are of the view that the disallowance of interest expenditure by the AO amounting to Rs. 2,91,89,882/- under section 36(1)(iii) of the Act is untenable and is accordingly deleted. Consequently ground No.10 of assessee's appeal is allowed. 10. Ground No. 12 - Charging of interest under section 234B of the Act 10.1 In this ground (supra), the assessee denies himself liable to be charged interest u/s 234B of the Act. The charging of interest is consequential and mandatory and the AO has no discretion in the matter. This proposition has been upheld by the Hon'ble Apex Court in the case of Anjum H. Ghaswala (252 ITR 1) (SC) and I, therefore, uphold the action of the AO in charging the assessee the aforesaid interest u/s 234B of the Act. The AO is, however, directed to re-compute the interest chargeable u/s 234B of the Act, if any, while giving effect of this order. 11. In the result, the assessee's appeal for Assessment Year 2011-12 is partly allowed. Order pronounced in the open court on this 30.04.2019. ============= Docu....
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.... not justified in upholding the action of the Learned TPO in rejecting the Transfer Pricing study carried out by the Appellant under TNMM. 5.2. The Honourable DRP is not justified in upholding the action of the Learned TPO in rejecting the ALP determined by the Appellant under TNMM for the impugned AY 2010-11 though the ALP determined by the Appellant by adopting identical methodology in similar kind of transactions for AY 2005-06 had been accepted by the Learned Joint Director of Income-tax (Transfer Pricing - II), Bangalore in his order dated 31.10.2008 passed under section 92CA of the IT Act. Document 3Traceback (most recent call last): File "C:\inetpub\vhosts\taxmanagementindia.com\httpdocs\python_image_text_project\google\direct_extract_text.py", line 19, in from google_doc_api import process_single_document File "C:\inetpub\vhosts\taxmanagementindia.com\httpdocs\python_image_text_project\google\google_doc_api.py", line 345 elif mime_type in ["image/gif"]: IndentationError: expected an indented block after 'if' statement on line 341 Document 4Traceback (most recent call last): File "C:\inetpub\vhosts\taxmanagementindia.com\ht....
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....nterest did not exist in the present case. 13. The Hon'ble DRP ought to have held that as the centralization of requisition cases took place on 20.10.2010, the assessment should have been made u/s 153C and the assessment made u/s 143(3) is bad in law. 14. The Hon'ble DRP ought to have held that the draft assessment order having been passed after the expiry of time-limit specified in fifth proviso to section 153B(1) is bad in law and hence, the final Document 7 Arm's length margin as discussed above [Gross profit/ Cost of Goods sold *100 = (586850116/632452016)*100] 92.78% Cost of the goods sold to AE 55,64,21,373 ALP of the international transaction is 192.78% of the cost 107,26,69,123 Operating revenue from AE transaction 68,42,36,809 Shortfall being the adjustment u/s 92CA 38,84,32,314 ^ Document 8 2010-11 AY Sales Average PLI Routine Selling & Non-routine Adjustment of the selling & mrktg expenditure on a/c of (A) comparables mrktg expenditure on selling & AMP expenditure of taxpayer mrktg expense (AMP/sales%) (A)*(B)-C (D) D-C=E E (B) 1,219,302,132 25.10% 306,044,8....
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....5,891/- as revenue expenditure cannot be allowed as per the provisions of section 36(1)(iii) of the 1.T. Act and the assessee firm has wrongly claimed this amount as revenue expenditure in its books of account. (tv) The details of interest debited to P & L Account were called for during the original scrutiny proceedings and the assessee vide submission dated 27.02.2013 had furnished the details of the loan taken and its utilization as follows: "We have started a new production line in our factory located at Makali, Sangalore which included the following 1. New Raw Material Stores 2. New Finished goods stores 3. New Quality Assurance Block 4. New Production facility A term loan of Rs. 60 crores was sanctioned by the bank for this purpose. This loan was utilised per the progress of the new facilities. During the AY 2009-10, certain facilities like RMS, FGS, ty Assurance etc were completed and put to use, while the balance portion was still in gress. The Interest on loan of Rs. 3,12,25,891 incurred during the year was attributable to the commencement period. This has been charged to the P & L A/c. The details are attached in ....