TaxTMI 
TaxTMI 
2020 (12) TMI 983
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....djustment - Manufacturing Segment 2. Transfer pricing adjustment Erred on facts and in law by making the transfer pricing adjustment amounting to INR 11,71,20,595 to its international transactions in connection with the manufacturing segment by not accepting the economic analysis undertaken by the Appellant. 3. Inappropriate use of single year margins of the comparable companies for transfer pricing analysis Erred in considering the operating profit margins of the comparable companies based on the financial data pertaining only to financial year ended 31 March 2013 and rejecting use of financial data of comparable companies for multiple years i.e. including 31 March 2012 and 31 March 2011. 4. Non- grant of working capital adjustment Erred in not granting suitable adjustments to account for differences in the working capital employed by the comparable companies. 5. Abnormal expenditure considered as operating in nature Erred in considering abnormal expense of program launch expenses as part of the operating expense for computation of operating margins of the Appellant. 6. Inappropriately rejecting compa....
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....pendent and without prejudice to the other grounds of appeal preferred by the Appellant 2. The assessee has filed revised grounds of appeal for ground Nos.6 & 7 as follows: Revised Ground 6. Inappropriately rejecting comparable companies identified by the Appellant Erred on facts and circumstances of the case by rejecting the following companies considered as comparable by the Appellant by applying erroneous comparability filter: * Jonas Woodhead & Sons (India) Limited; and * Mubea Suspension India Limited 7. Inappropriately considering additional companies as comparable to the Appellant in relation to manufacturing segment Erred on facts and circumstances of the case by accepting the following additional companies as comparable to the Appellant based on unreasonable comparability criteria: * A B I Showatech (India) Limited; * Autoline Industries Limited; and * Harita Seating Systems Limited. The Appellant craves, to consider each of the above grounds of appeal without prejudice to each other and craves to leave or add, alter, delete or modify all or any of the above grounds of app....
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.... under: "3.16 Objection 18 - Working Capital Adjustment Having heard the objection, on perusal of the order of the TPO, we do not find any abnormality in the Working Capital Adjustment allowed by the TPO. However, we are of the view that the working capital adjustment needs to be computed in respect of comparables retained without putting any restrictions. Accordingly, the TPO is directed to compute mean of working capital adjustment in respect of comparables retained, after giving effect to the directions contained in this order". Since the TPO has not complied with the directions given by the DRP therefore, we set aside this issue to the record of the TPO/AO for giving the proper working capital adjustment without any restriction as held by the co-ordinate bench of this Tribunal in the case of Citrix R & D India Pvt. Ltd. IT(TP)A No.1289/Bang/2014 wherein it was held that the TPO cannot restrict the working capital adjustment artificially from the actual computation." 7. Being so, in our opinion, the AO/TPO has to consider the assessee's case as entitled for working capital adjustment as in earlier year, while determining the ALP. Accordingly, we direct the A....
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.... case as held in the case of KBACE Technologies Pvt. Ltd. (supra) in para 9 of the order as follows: "9. We have given a careful consideration to the submissions of the Ld. Counsel for the assessee and are of the view that if in any of the three previous financial years, if Sagarsoft (I) Ltd. has made a profit, then it shall not be excluded by applying the persistent loss filter. The TPO/AO will verify this aspect and consider inclusion of this company in the final comparables in accordance with law, after due opportunity to the assessee." 11. Accordingly, we remit the issue to the file of the AO/TPO and as in the case of KBACE Technologies India Pvt. Ltd. (supra). 12. Ground No.10 of the appeal states that TP adjustment should be restricted to international transaction with the Associated Enterprises. The contention of the assessee is that as the quantum of sales made to the A.E. vis-à-vis total sales is 52.16%, it is stated that if the TP adjustment is to be restricted only to the quantum of manufacturing sales pertaining to A.Es i.e. 52.16% and it cannot be extended to other than international transactions to A.E. 13. On the other hand, Ld. D.R. submitte....