TaxTMI 
TaxTMI 
TaxTMI 
2020 (1) TMI 866
X X X X Extracts X X X X
X X X X Extracts X X X X
....on and decision. 3. Briefly stated, the facts of the case are that the assessee is a part of the Koso group, which has Control valve manufacturing locations in Japan, UK, USA, Korea, China and India. The assessee was incorporated in the year 2004 and during the year under consideration it was engaged in the manufacture and supply of control valves and actuators. Return was filed declaring total income of Rs. 19.36 crore and odd. Certain international transactions were reported in Form No.3CEB. The AO made a reference to the Transfer Pricing Officer (TPO) for determining the Arm's Length price (ALP) of the international transactions. Instantly, we are concerned with a combined international transaction of sale of finished goods to various ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....essee and the comparables and thereafter consequential transfer pricing adjustment accordingly. While giving effect to the direction given by the DRP, the TPO recomputed the profit margin of the assessee at 11.76% by taking net gain/loss on foreign currency fluctuation as non-operating. Revised adjusted average PLI of the above referred three companies was also computed accordingly at 15.12% after giving effect to the working capital adjustment. This led to the transfer pricing addition of Rs. 4,66,04,340/-, against which the assessee has come up in appeal before the Tribunal. 4. We have heard the rival submissions and gone through the relevant material on record. There is no dispute on the aggregation of the above referred two transaction....
X X X X Extracts X X X X
X X X X Extracts X X X X
....at the AO/TPO, while giving effect to the directions of the DRP, could not have altered the earlier accepted rate of interest at 9.86%, the ld. DR contended that the rate of interest applied by the assessee during the course of transfer pricing proceedings was wrongly taken, which was rightly corrected in the order giving effect to the direction of the DRP. The moot question, which ergo arises is whether the TPO, having accepted the rate of interest for the purposes of calculating working capital adjustment at 9.86% at the time of passing order u/s 92CA(3) of the Act, was right in changing such rate to 14.61% for whatever reason, while giving effect to the DRP's direction when there was no such direction in this regard? 5. Section 144C of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r u/s 144C(3). Now, we come to the second scenario of the assessee aggrieved by the draft order. If the assessee is not satisfied with the draft order, subsection (5) comes into play, which stipulates that the DRP shall, in a case where any objection is received under sub-section (2), issue such necessary directions for the guidance of the AO to enable him to complete the assessment. Sub-section (13) provides that : `Upon receipt of the directions issued under sub-section (5), the Assessing Officer shall, in conformity with the directions, complete ....... the assessment without providing any further opportunity of being heard to the assessee ...'. It means what is required to be done by the AO at the stage of completing the assessment unde....
X X X X Extracts X X X X
X X X X Extracts X X X X
....6 by considering the adjusted margins of the comparables with the working capital adjustment on the basis of rate of interest at 9.86%. The assessee assailed the draft order before the DRP on certain issues other than the rate of interest for computing the working capital adjustment. The DRP gave certain directions but did not direct to alter such interest rate either suo motu or at the instance of the assessee. Once the position was so, the rate of interest at 9.86% attained finality as the draft order was passed with such a rate of interest. The AO/TPO, while giving effect to the directions of the DRP, were bereft of any power to change any aspect of the draft order save and except the direction of the DRP including the rate of interest t....