TaxTMI 
TaxTMI 
2019 (10) TMI 1441
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.... Export Business [Air and Sea] b) Import Business [Air and Sea] 4. In case of the export business, the principal contractor with the shipper/consignor would be JAS India. JAS India would organize the collection of the goods from the Exporter's premises and load the same for transport (air or ship). It would also provide a copy of the airway/shipping bill and bill of lading to the Exporter. The copy of Bill of lading/House Airway Bill after loading the material is given to the shipper. Thereafter, it would communicate with its associated enterprise in the destination country, who would organize the material released in the recipient country, including custom clearance and delivery to the consignee. JAS will raise the bill to the exporter for the transportation charges; haulage charges, custom clearance charge, ocean/air freight, air handling/clearing, charges, documentation charges, terminal charges, advance cargo declaration charges and fumigation charges. 5. In case of the import business, the principal contractor with the shipper/consignor would be the JAS Associated Enterprises and JAS India would be responsible for clearing the goods at the Indian port and co-ordination....
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....tailed reply vide letter dated 11.10.2011. 15. Reply filed by the assessee did not find any favour with the Assessing Officer who was of the opinion that the assessee has failed to specify whether these services were actually received or not. 16. The TPO observed that the assessee has neither been able to specify the services nor been able to produce any evidence of services. The TPO further observed that the assessee has not been able to produce any evidence of any tangible benefit received from such services and formed a belief that the AE has imposed upon the assessee certain costs pertaining to itself and without passing on either any services or any benefit out of the above. 17. Rejecting the contentions of the assessee, the TPO made an adjustment on account of IGS payment made to AE at Rs. 35,89,000/- by determining the Arm's Length Price of IGS at Rs. NIL. 18. The assessee raised objections before the DRP vehemently contending that the comparables selected by the TPO are not functionally comparable with those of the assessee in as much as the assessee is providing only freight forwarding services whereas the comparables are either into transportation business or ware....
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....like transportation, shipment, etc. and, therefore, comparables selected by the TPO should be upheld. 26. We have given thoughtful consideration to the orders of the authorities below. There is no quarrel in so far as the most appropriate method is concerned. Both the appellant and the TPO have taken TNMM as the most appropriate method with PLI OP/OC. We will now address to the disputed comparables. VRL LOGISTICS LIMITED 27. The website screen shot of this company shows that its name is entered in Limca Book of Records as the largest fleet owner of commercial vehicles in India in the private sector. The Annual Report of this company shows that this company has acquired one Hawker Beechcraft Premier IA Aircraft. Its freight receipts are at Rs. 51,258.80 lakhs. The fixed assets show vehicles and there is also one aircraft. The segment revenue shows revenue from goods transport, bus operation, sale of wind power and air charter business. 28. We further find that there is allocable expenditure with un-allocable revenue and un-allocable assets. In our considered opinion, the business profile of this company is far different from that of the appellant company. Moreover, the segmental....
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....the TPO must look into the calculation made by the assessee and decide afresh whether this company passed the RPT filter or not. We, accordingly restore this comparable to the file of the TPO. The TPO is directed to examine the RPT and whether it passes the filter. The TPO shall given reasonable opportunity of being heard to the assessee. GORDON WOODROFEE LOGISTICS LTD 34. The ld. counsel for the assessee pointed out that Gordon Woodrofee Logistics Ltd. was excluded by the assessee when it applied a filter on comparables having 75% of turnover. It is the say of the ld. counsel for the assessee that when the TPO has applied filter on turnover of more than Rs. 1 crore, then this comparable should have been included in the final list of comparables. 35. We find force in the contention of the ld. counsel for the assessee. Earlier, when the assessee applied filter of 75% of Revenue, this comparable was excluded. But later on, the TPO applied the filter and included the companies having turnover of more than Rs. 1 crore. Since this company now fits in the filter adopted by the TPO, we direct the TPO to include this company in the final list of comparables. 36. With the above directio....
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....s per law but in judging the allowability thereof as business expenditure, he has no authority to disallow the entire expenditure or a part thereof on the ground that the assessee has suffered continuous losses. The financial health of assessee can never be a criterion to judge allowability of an expense; there is certainly no authority for that. What the TPO has done in the present case is to hold that the assessee ought not to have entered into the agreement to pay royalty/brand fee, because it has been suffering losses continuously. So long as the expenditure or payment has been demonstrated to have been incurred or laid out for the purposes of business, it is no concern of the TPO to disallow the same on any extraneous reasoning. As provided in the OECD guidelines, he is expected to examine the international transaction as he actually finds the same and then make suitable adjustment but a wholesale disallowance of the expenditure, particularly on the grounds which have been given by the TPO is not contemplated or authorised." 22. Even Rule 10B(1)(a) does not authorise disallowance of any expenditure on the ground that it was not necessary or prudent for the assessee to have i....