AI Drafter 
TaxTMI 
TaxTMI 
2018 (10) TMI 1886
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....make the entire proceedings carried out infructuous. 02. The appellant craves leave to add, amend, alter or delete any of the above grounds of appeal during the course of appellate proceedings before the Hon'ble Tribunal." 3. The assessee has impugned the assessment order on following grounds : "The appellant objects to the order passed under section 143(3) r.w.s. 144C(13) of the Income-tax Act, 1961 (Act) by the learned Dy. Commissioner of Income-tax, Circle-14, Pune (Assessing Officer or AO) in pursuance of the directions issued under section 144C(5) of the Act by the learned Dispute Resolution Panel (DRP), on the following amongst other grounds: On the facts and in circumstances of the case and in law: 1. The AO in pursuance of the directions given by the DRP erred in determining the income of the appellant at INR 4,63,77,290 as against the returned income of INR 61,99,934. Reference to Transfer Pricing Officer 2. The transfer pricing proceedings initiated by the AO under section 92CA(1) of the Act, are without any jurisdiction and ought to be quashed. Addition on account of Transfer Pricing Adjustments ....
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.... functionally comparable to the assessee. 12. The AO/DRP/TPO erred in the following: a. In incorrectly calculating the operating margin of Informed Technologies India Ltd. at 12.06% instead of 9.59%; b. In not selecting Harita Techserv Limited as a comparable company, which is functionally comparable and selected by the assessee through due search process stated above. 13. The AO/DRP/TPO erred in not granting the relief as provided In the second proviso to section 92C(2) of the Act. Addition on account of other tax issues 14. The AO erred in not following the directions of the DRP and excluding the amount of INR 357,169 from the total taxable income of the assessee, which relates to the reversal of excess provision for interest on service tax disallowed in AY 2010-11. 15. The AO erred in initiating penalty proceedings under section 274 r.w. section 271(1)(c) of the Act. Each one of the above grounds of appeal is independent and without prejudice to other. The appellant reserves the right to add, alter or amend to the above grounds of appeal." 4. Shri Vispi Patel with Shri Suresh Dhoot appearing on beha....
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....nt of proportionate adjustment at entity level. A perusal of the orders of authorities below show that the assessee had asked for adjustment only on the AE sales as disclosed in segmental accounts. The assessee in the immediately preceding assessment year 2010-11 had computed adjustment on same lines. The DRP accepted the same. In the assessment year under appeal the adjustment is sought at entity level and there has been no change in the facts. The DRP directed the TPO to make adjustment only on AE sales as was made in the preceding assessment year. The assessee in order to fortify his submissions with respect to allowability of adjustment at entity level has placed reliance on the decision of Co-ordinate Bench of the Tribunal in the case of WIKA Instruments India Pvt. Ltd. Vs. Dy. Commissioner of Income Tax (supra). We find that the Co-ordinate Bench of Tribunal allowed TP adjustment at entity level by holding as under : "28. The issue raised in ground of appeal No.6 raised by the assessee is against transfer pricing adjustment made on entity level. 29. The plea of assessee before us is that the issue has been settled by the Hon'ble Bombay High Court in CIT Vs. ....
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....ded on 9th September, 2015 has while dealing with transfer pricing adjustment in the absence of segmental accounts held that adjustments have to be restricted only to transactions with Associated Enterprises. It further held that where separate accounts are not available, then proportionate adjustments to be made only in respect of the international transactions with Associated Enterprises. 12. We are in respectful agreement with the view of the Delhi High Court in Keihin Panalfa Ltd 381 ITR 407. One must not lose sight of the fact that the transfer pricing adjustment is done under Chapter X of the Act. The mandate therein is only to redetermine the consideration received or given to arrive at income arising from for International Transactions with Associated Enterprises. This is particularly so as in respect of transaction with non Associated Enterprises, Chapter X of the Act is not triggered to make adjustment to considerations received or paid unless they are Specified Domestic Transactions. The transaction with non Associated Enterprises are presumed to be at arms length as there is no relationship which is likely to influence the price. If the contention of the Revenu....
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....e pleaded that internal CUP method was the most appropriate method, wherein hourly rates charged to associated enterprises at 24 Euros be applied as against charges levied on non-associated enterprise charges. The TPO on the other hand, had applied TNMM method and had made comparison with external comparables in order to benchmark international transactions of the assessee. We are of the view that in order to benchmark international transactions undertaken by the assessee, the most appropriate method needs to be applied. The question is which is the most appropriate method? The assessee had selected TNMM method and then by way of revised form No.3CEB during TP proceedings has changed its stand to apply internal CUP of man hourly rates. In order to benchmark international transactions undertaken by the assessee, an endeavour should be made to apply the most appropriate method and the same may be what has been applied by the assessee in TP study report or as proposed in TP proceedings. The stand of assessee that it is providing services to its associated enterprises and charging hourly rates, which worked out to 24 Euros per hour as against charges raised against nonassociated enterp....