TaxTMI 
TaxTMI 
2021 (9) TMI 130
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the assessee read as under: "1. The Ld. Transfer Pricing Officer ('TPO')/Ld. Assessing Officer ('AO') and consequently the Hon'ble Dispute Resolution Panel ('DRP') have erred in law and on facts and circumstances of appellant's case, in making a transfer pricing ('TP') adjustment of Rs. 4,06,60,617/- on account of Arm's Length Price of the International Transactions of the appellant under section 92CA of the Income Tax Act, 1961 ('the Act'), wholly on illegal, erroneous and untenable grounds. 2. The order of Assessment including order of the Ld. TPO is bad in law and not in accordance with the facts of the appellant. 3. The Ld. TPO/Ld. AO and consequently the Ho....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ansactions of the appellant and not in the proportion in which the international transactions forming part of the cost base of the appellant bears to the total operating cost of the appellant i.e. 77.84%. 5.1 The Ld. TPO/Ld. AO/Hon'ble DRP erred in law in not restricting the adjustment to the proportion of international transactions with AEs on the cost side which were admittedly 77.84% of the total operating cost. 6. The penalty proceedings initiated u/s. Sec 271(1)(c) are on wholly illegal and untenable grounds since there was no concealment of any income nor submission of inaccurate particulars of income, nor any default according to law by the appellant. That each ground is independent of and without preju....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed. 8. Objections were raised before the DRP and the DRP affirmed the order of the TPO vide order dated 11.05.2018 rejecting the contentions of the assessee for capacity utilisation adjustment for personnel expenses, adjustment importing duty and related costs on raw material and proportionate transfer pricing adjustment. Final assessment order was, accordingly, passed which is under consideration before us. 9. Ground Nos. 1 and 2 are of general in nature and need no separate adjustment. 10. Ground No. 3 relates to non granting of adjustment on import duty. 11. This issue was considered by this Tribunal in assessee's own case in A.Y 2013-14 in ITA No. 7801/DEL/2017 order dated 08.06.2021 and has decided this issue against th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 22.09.2017 directed as under: "3.5.2 With regard to idle capacity adjustment, we do not approve ad-hoc adjustment of 37% of cost of sales? (import duty on tangibles) and personnel cost, as has been done by the assessee. Assessee has to show that the capacity utilisation of the assessee was 63% and that of the comparables averaged at 100%. No fact can be assumed in the name comparability adjustment." vii. The factual matrix of the case remains the same for this AY also. So there is no reason to differ from the above direction of the DRP. The TPO has provided for the underutilization of capacity by adjustment in depreciation. The order of the TPO is upheld on this issue. 6. Without prejudice to the above, the Ld. A....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he business, the claim the assessee needs to be re-examined with the details furnished. This is more so when learned dispute resolution panel accepted that there is a higher depreciation claim in the case of assessee compared to the comparable companies. In view of this we set aside ground number 3.3 of the appeal back to the file of the learned transfer pricing officer with a direction to examine the claim of the assessee that those expenditure on salary of the employees who are working for the development of the business and not for earning the operating profit for the year requires proper adjustment." 16. As no distinguishing fact has been brought to our notice, respectfully following the decision of this Tribunal [supra], we direct a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Rs. 1,29,70,076/-. As is apparent from the above, the said adjustment related to entire expenses and not just the international transactions alone. Since the international transactions only constituted 23.38%, a TP Adjustment proportionate to that extent could be made in respect of such international transactions. Thus, only an adjustment of Rs. 30,33,593/- could be attributed to the international transactions in question. The same was accepted by the CIT(A) as well as the Tribunal. We do not find any infirmity with their decision." 20. Respectfully following the findings of the Hon'ble Jurisdictional High Court of Delhi [supra], we direct the Assessing Officer to accept the computation of proportionate TP adjustment as computed by t....