AI Drafter 
TaxTMI 
TaxTMI 
2020 (7) TMI 658
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.... and in law in determining the arm's length price of import of raw material at Rs. 73,20,85,000/- as against the transaction price of Rs. 83,32,29,000/- on account of adjustment to the arm's length price on the basis of the order passed under section 92CA(3) of the Act by the TPO. 1.2 That the assessing officer erred on facts and in law in not excluding International Flavors & Fragrances (I) Pvt. Ltd. from the set of comparable companies, in terms of the directions in the order passed under section 144C(5) of the Act by the Dispute Resolution Panel ("DRP"). 1.3 That the assessing officer / TPO erred on facts and in law in not considering Ultra Industries Ltd. as part of comparable companies in terms of the directions in the order passed under section 144C(5) of the Act of the DRP. 1.4 That the assessing officer / TPO erred on fact and in law in not appreciating that the average operating profit margin of the comparable companies after considering directions of the DRP is worked out to 7.65 % as against the profit margin of the appellant at 4.015 and therefore, the Transfer Pricing adjustment, proposed by the TPO, was liable to be deleted. Without....
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....claim of deduction under section 36(1)(vii) of the Act was complied in the appellant's case. 2. The revenue in its cross appeal has raised following grounds of appeal; 1. "On the facts and circumstances of the case and in law, the Ld. DRP erred in directing TPO to exclude M/s. International Flavors & Fragrances (I) Pvt. Ltd. On the basis of varying accounting period whereas the comparables are includable on the basis of corresponding accounting period of comparables and that of assessee" 2. "On the facts and circumstances of the case and in law, the Ld. DRP erred in directing TPO to include M/s Ultra International Co. Ltd. whereas the assessee itself contradicted the basis of inclusion i.e. high import component of the comparable and the assessee in the case of M/s Synthite Industries Ltd.". 3. Brief facts of the case are that the assessee-company is a corporate entity engaged in the business of manufacturing and marketing of industrial flavors, fragrances, and chemical specialties, filed its return of income for AY 2009-10 on 30.09.2009. The assessee while filing return of income reported international transaction with its associated enterprises (AE) and fu....
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.... control transaction. The TPO made adjustment at pro-rata basis. The TPO worked out the adjustment of Rs. 10,11,43,000/- in the following manner; Particulars Amounts (Rs. 000/-) Total operating income A 1973498 Total operating expenses -B 1894264 Operating profit C (A-B) 79234 NPM C/A as per books 4.01% International transaction of import of goods at book value 833229 International transaction of import of goods at ALP 732085 Adjustment under section 92 CA 101143 6. On receipt of order of TPO under section 92CA(3), the assessing officer added the adjustments suggested by TPO while passing draft assessment order under section 143(3)/144C(1). The assessing officer also disallowed claim of bad debts of Rs. 14,36,000/-, by taking view that the assessee despite issuing show cause notice failed to justified the claim of bad debts. The copy of draft assessment was served upon the assessee. The assessee exercised its option for filing objections before dispute resolution penal (DRP). The DRP after hearing the objections of the assessee directed the TPO/AO to exclude one comparable namely International Flavours and Fragrances (I) Ltd and to....
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.... Tribunal) Rules, 1963, Income Tax Appellate Tribunal Guidelines dated 13.04.1970 and para 174 of Income Tax Appellate Tribunal Manual. 10. We have considered the submission of both the parties and gone through the contents of application for condonation of delay. We have deliberated on the Rule -10 of Income tax (Appellate Tribunal) Rules, 1963, Income Tax Appellate Tribunal Guidelines dated 13.04.1970 and para 174 of Income Tax Appellate Tribunal Manual. After considering the submission of ld. DR for the revenue that the delay in filing the appeal is not intentional or deliberate and the decision of Hon'ble Apex Court in Land Acquisition Collector Vs Mst Katiji and other (supra) wherein the Hon'ble Court held that when substantial justice and technical consideration are pitted against each other, the cause of substantial justice to be preferred. Thus, considering the contents of the application for condonation of delay and the submissions of the ld. DR for the revenue that delay in filing the appeal was neither intentional nor deliberate and it was due to bonafide and wrong belief of the AO that the directions of DRP is against the assessee, the delay in filing appeal by reven....
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....sub-section (2A) of section 253 of the Act. The ld. DR for the revenue submits that the case laws relied on behalf of assessee is not applicable on the facts of the present case. 13. We have heard the submissions of the learned authorised representative (ld AR) for the assessee and the learned Departmental Representative (ld. DR) for the revenue and deliberated on the case laws relied on behalf of the assessee. It is an admitted position that the assessee has neither filed Cross Objection for objecting the maintainability of the appeal filed by the revenue. However, the ld. AR for the assessee has raised legal objection, which goes to the root of amenability of the appeal filed by the revenue. Therefore, we admit the objection of the assessee on the maintainability of revenue's appeal. For appreciation of various legal aspects and effect of 'repeal' or 'omission', we have gone through the various sections 6, 6A and 24 of General Clauses Act. The section(s) 6, 6A and 24 of General Clauses Act are read as under; 6. Effect of repeal.-Where this Act, or any (Central Act) or Regulation made after the commencement of this Act, repeals any enactment hitherto made or hereafter ....
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.... area, has, by a subsequent notification, been withdrawn form the re-extended to such area or any part thereof the provisions of such Act or Regulations shall be deemed to have been repealed and re-enacted in such area or part within the meaning of this Section). 14. A careful reading of section 6 of General Clauses Act (this Act) makes it clear that made after the commencement of General Clauses Act, any Central Act or Regulation repeals any enactment hitherto made or hereafter to be made, then, unless a different intention appears, the repeal shall not effect affect any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture or punishment as aforesaid, and any such investigation, legal proceeding or remedy may be instituted, continued or enforced, and any such penalty, forfeiture or punishment may be imposed as if the repealing Act or Regulation had not been passed. 15. Further a careful reading of section 6A this Act make it clear that where any Central Act or Regulation made after the commencement of this Act repeals any enactment by which the text of any Central Act or Regulation was amended by the exp....
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....spect of any rights and liability acquired or incurred under the enactment so omitted." The Hon'ble Apex Court took a view that in majority of the cases, this would cause great public mischief, and that the decision in Fibre Board case was therefore clearly delivered by their lordship for the public good, being, at the least reasonably possible view and that no aspect of the question at their hand was remained unnoticed in Fibre Board Case.(emphasis added by us) 19. With the aforesaid legal back ground and with utmost regard to the decision of coordinate bench the coordinate bench relied by ld AR for the assessee in Texport Overseas (supra), we have noted that the bench was not having the benefit of the latest judgment of the Hon'ble Supreme Court in the matter of Fibre Boards P. Ltd [(2015) 52 taxmann.com 135] as well as in the matter of M/s. Shree Bhagwati Steel Rolling Mills [CA No.4280 of 2007, dt.24.11.2015] which were not brought to the notice of the bench by either of the parties. 20. The Hon'ble Supreme Court in these two matters had elaborately discussed the issue of repeal /omission and after relying upon the decision of the coordinate bench had decided the issue th....
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....olhapur Cane Sugar Works Ltd as also in the case of General Finance Company following the decision in Royala Corporation Ltd, loses its binding value. 17. As we have already noted that the Hon'ble Supreme Court in the case of Shree Bhagwati Steel Rolling Mills again reiterated that repeal would include repeal by way of an express omission. The Supreme Court further held that the decision in Fibre Boards Private Limited clarifies the law in holding than an omission would amount to repeal. As a result, the provisions of Sec. 6 of the General Clauses Act would apply to allow the previous operation of the provision so omitted or anything duly done or suffered thereunder, and such a view is reasonable and for the public good. 18. At the coast of repetition we may note that the Hon'ble Supreme Court in the matter of Fibre Board (supra) and Bhagwati Steel Rolling (supra) had elaborately reproduced the paragraphs of General Finance Co., (supra) and also the earlier two judgments relied in General Finance Co., (supra), namely Rayala Corporation P. Ltd and Kolhapur Cane Sugar Works Ltd, and observed that even the court has not referred the matter to the larger bench. The Hon'ble Su....
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....AR for the assessee; however, it is always presumed that the law declared by the Court is in the knowledge of the legal practitioner. We instead of going in further discussions are of the view that in view of the decision of Hon'ble Apex Court in Fibre Boards (P) Ltd (supra), the word 'repeal' includes 'omission'. Thus, we do not find any merit in the objection raised by the ld. AR for the assessee which we are rejecting, being without any merit and held that appeal filed by the revenue with in currency of the sub-section 2A of Section 253 of the Act, is valid. 22. Now, we shall advert to various grounds of the appeals filed by the parties. Ground No. 1 & 1.1 in assessee's appeal is general and needs no specific adjudication. Ground No. 1.2 to 1.4 in assessee's appeal and Ground No. 2 & 3 of revenue's appeal are interconnected. The assessee is supporting the exclusion of comparable company namely International Flavors & Fragrances (I) Ltd (IFF) and inclusion of Ultra Industries Ltd (UIL). On the contrary the revenue in its appeal is challenging the exclusion of comparable IFF and inclusion of UIL. The ld. AR for the assessee submits that despite the direction of DRP for exclusio....
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....in Schlumberger India Technology Center (P) Ltd Vs DCIT [2018] taxmann.com 19 (Pune- Trib). 24. We have considered the submissions of the ld. representatives of the parties and have gone through the orders of the lower authorities. The TPO proposed to include IFF as a valid comparable company by taking view that the assessee while making TP research for comparable, rejected this company only on the ground of (RPT) related party transaction (table -II page 2 of TPO order). On show cause the assessee vide its reply dated 29.10.2012 submitted that RPT is Rs. 36.98 Crore out of total transaction of Rs. 382 Crore. The TPO concluded that RPT is less than 10% hence; the objection against the inclusion was rejected. The ld DRP excluded this comparable on the ground that that the accounts for this company is for the period of 27th December 2007 to 2nd January 2009, therefore, it does not fulfills the conditions of contemporary dates and directed TPO to exclude. Before us the ld. DR for the revenue submitted the financial data for the period of 27 December 2007 to 2nd January 2009. 25. The Hon'ble Bombay High Court in CIT Vs PTC Software [2016] 376 ITR 176 (Bom), while considering the ....
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....ynthite Industries and included solely on the basis of activities. The ld DR for the revenue have not brought any fact to our notice to differentiate the similarities in function, thus, we upheld the inclusion of this comparable by ld DRP. In the result the ground No. 3 of the appeal by revenue is rejected. 29. In the result the appeal of the revenue is dismissed. 30. Further considering the details furnished by the assessee in support f Ground No. 1.2 to 1.4 that in case the exclusion of IFF and inclusion of UIL is affirmed the average mean margins of final set of comparable as per the direction of DRP would be within the tolerance range of +/- 5%, with the margin of assessee. Therefore, the discussions of the exclusion or inclusion of other comparable or other grounds of appeal raised by assessee have become academic. 31. Ground No. 2 relates to disallowance of bad debts. The ld. AR for the assessee submits that during the relevant financial year the assessee written off bed debts of Rs. 14.36 lakhs in the profit and loss accounts. Such bad debts were shown in the invoices raised on customers in the previous year and was credited to the accounts. The assessee during t....