TaxTMI 
TaxTMI 
2021 (8) TMI 908
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....llant. 1.2 That the Ld. AO failed to appreciate the submissions made/contentions raised by the appellant and further erred in making several observations and inferences in the impugned assessment order which are factually incorrect and legally untenable. Transfer Pricing Grounds 2. That, in framing the impugned assessment order, the reference made by the Ld. AO, under section 92CA(1) of the Act suffers from jurisdictional error, as the Ld. AO, had not recorded any reasons nor he had any material whatsoever on the basis of which he could even reach a prima-facie opinion, that it was 'necessary or expedient' to refer the matter to the learned Additional Commissioner of Income Tax, International Tax & Transfer Pricing - 1 (1), New Delhi ('Ld. TPO') for computation of arm's length price (' ALP'). 3. That on facts and circumstances of the case and in law, the Ld. AO/Ld. TPO/Hon'ble Dispute Resolution Panel ('Hon'ble DRP') have erred, in making an adjustment of INR 4,41,74,915 in relation to the international transaction pertaining to purchase of capital goods from AEs without determining the ALP of the transaction in accordance with the provisions of Section 92CA(3) read with Se....
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....g the transfer pricing adjustment, wherein the Ld. TPO has arbitrarily assumed that the AEs charged a markup of 8 % in relation to sale of capital goods to the Appellant. 3.7 That on the facts and circumstances of the case and in law, the Ld. AO/Ld. TPO/Hon' ble DRP have erred in making/upholding the addition of INR 4,41 74,915 made by following the approach of disallowing the alleged mark-up @ 8%, which has been charged by the AE on sale of capital goods without appreciating that even going by the Ld. TPO's approach, only the depreciation portion of such alleged markup would have been considered as deduction while computing the income chargeable to tax under the head PGBP for AY 2016-17. The remaining amount would not have been considered for the purpose of computing the income chargeable to tax. 3.8 That on the facts and circumstances of the case and in law, the Ld. AO/Ld. TPO/Hon'ble DRP have erred in making/upholding additional transfer pricing adjustment at the rate of 15% of INR 3,84,12,970 without appreciating that once the entire amount of INR 3,84,12,970 has been proposed to be disallowed by the Ld. TPO, any additional adjustment for depreciation would result in du....
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....rcumstances of the case and in law, the Ld. AO has erred in rejecting the appellant's contention that the difference appearing in the amount of revenue recognized as per books of accounts of the appellant and as per Form 26AS is on account of different accounting policies being followed by the payer/customer and the appellant. 7. That on the facts and circumstances of the case and in law', the Ld. AO has erred in making an addition of INR 30,74,09,825/- basis the order of the Ld. TPO dated 18 November 2020 passed pursuant to directions of the Hon'ble DRP without considering the order of the Ld. TPO passed under section 154 of the Act dated 26 March 2021 reducing the amount of TP addition to INR 4,41,74,915/-. 8. That on the facts and circumstances of the case and in law, the Ld. AO, has erred in computing the tax payable by considering the assessed income at INR 170,50,50,356/- instead of assessed income of INR 111,30,04,560/-. 9. That on the facts and circumstances of the case and in law, the Ld. AO, has erred in considering returned income of INR 61,88,16,224 /- as against INR 61,86,41,220/- 10. That on the facts in the circumstances of the ease and in law, the Ld. AO....
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....ction pertaining to purchase of capital goods from AEs was determined along with the other transactions covered under the CSD segment of the assessee under combined transaction approach and the TPO accordingly, made two fold adjustment viz., alleged markup of 8% on the purchase cost i.e. Rs. 3,84,12,970/- and depreciation of 15% on alleged markup of 8% i.e. Rs. 57,61,945/-. The panel has carefully considered the rival contentions. It is noticed that the purchase of capital goods does constitute a separate international transaction in terms of express statutory provisions contained in Section 92B(1) read with explanation (1)(a) and needs to be separately benchmarked, especially for the purpose of calculating depreciation and other cost related expenses as held by the Delhi Bench of the ITAT in Honda Motorcycle & Scooters India Pvt. Ltd. Vs ACIT (2015) 56 taxmann.com 237 . The contention of the assessee that the ALP of international transaction pertaining to purchase of capital goods from AEs has been determined along with the other transactions covered under the CSD segment of the assessee under combined transaction approach, cannot therefore be accepted. The panel also notices ....
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....ee in the instant case has not filed the purchase bills of these assets in the hands of its AE and as to whether the AE has sold these assets to the assessee at the same price at which they were purchased by the AE or with any mark- up value, therefore, we are of the considered opinion that the contention of the assessee that the purchase of medical equipments are at ALP cannot be accepted." The assessee made an argument that under the Indian TP regulations, the TPO was obligated to determine the ALP of an international transaction by applying the most appropriate method and not by any adhoc method. Reliance was placed on Lumax Industries Ltd. Vs ACIT in ITA No. 5252/Del/2011, AWB India Pvt. Ltd. Vs DCIT in ITA No. 6480/Del/2012, MC Retail Pvt. Ltd. Vs ACIT in ITA No. 1777/M/2016, ACIT Vs Koch Chemical Technology Group (India) Ltd. in ITA No. 8091/Mum/2011, 7236/Mum./2020, 7958/Mum/2011, TNS India Pvt. Ltd. Vs ACIT in ITA No. 944/H/07, 194 & 74/H/08, 793/H/09, 654 & 655/H/10 & 7/H/2012 and NLC Nalco India Ltd. in ITA No. 529/Kol/2008 in this regard. The contention of the assessee is well founded but this contention can hold good only if the relevant material is made available to ....
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....transaction given in section 92B that it refers to ' a transaction' between two or more associated enterprises. The term ' transaction' has been defined in section 92F(v) and also in rule 10 A(d). The rule defines the term 'transaction' to include: ' a number of closely linked transactions. 'Thus, where the transactions are not closely linked, then their ALP should be determined separately for each international transaction and such determination of ALP for ' an' international transaction as per section 92C(1) is done as per the most appropriate method, being one of the methods given in the provision. To put it simply, each international transaction is viewed separately and independent of other international transactions for determining its ALP by using one of the given methods, which is the most appropriate method having regard to the nature of transaction or class of transaction or functions performed, etc. It is impermissible to combine all the international transactions for determining their ALP in a unified manner when such transactions are diverse in nature". 8. Since, the assessee has been denied proper opportunity, the TPO and the ld....