TaxTMI 
TaxTMI 
2022 (8) TMI 891
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....ee. Both the parties have filed applications explaining the cause of delay and requesting for condonation. The assessee has also put up on record an affidavit explaining the reasons for delay. 2.1. We have duly considered rival contentions and gone through the record carefully. Sub-section 5 of Section 253 contemplates that the Tribunal may admit an appeal or permit filing of memorandum of cross-objections after expiry of relevant period, if it is satisfied that there was a sufficient cause for not presenting it within that period. Similarly, it has been used in section 5 of Indian Limitation Act, 1963. Whenever interpretation and construction of this expression has fallen for consideration before Hon'ble High Court as well as before the Hon'ble Supreme Court, then, Hon'ble Court were unanimous in their conclusion that this expression is to be used liberally. We may make reference to the following observations of the Hon'ble Supreme court from the decision in the case of Collector Land Acquisition Vs. Mst. Katiji & Others, 1987 AIR 1353: "1. Ordinarily a litigant does not stand to benefit by lodging an appeal late. 2. Refusing to condone delay c....
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....sort to dilatory tactics but seek their remedy promptly. The idea is that every legal remedy must be kept alive for a legislatively fixed period of time. A court knows that refusal to condone delay would result foreclosing a suitor from putting forth his cause. There is no presumption that delay in approaching the court is always deliberate. This Court has held that the words "sufficient cause" under Section 5 of the Limitation Act should receive a liberal construction so as to advance substantial justice vide Shakuntala Devi lain Vs. Kuntal Kumari [AIR 1969 SC 575] and State of West Bengal Vs. The Administrator, Howrah Municipality [AIR 1972 SC 749]. It must be remembered that in every case of delay there can be some lapse on the part of the litigant concerned. That alone is not enough to turn down his plea and to shut the door against him. If the explanation does not smack of mala fides or it is not put forth as part of a dilatory strategy the court must show utmost consideration to the suitor. But when there is reasonable ground to think that the delay was occasioned by the party deliberately to gain time then the court should lean against acceptance of the explanation.....
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.... reason for such delay in the affidavit placed on the record. We have gone through the same. The affidavit in itself contains an exhaustive explanation. 2.6. In view of the above, we condone the delay in filing of the appeal as well as the cross-objection and proceed to adjudicate them on merits. 3. The department has come up before the tribunal in appeal by challenging the following grounds:- "1. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in determining the arm's length rate of interest in accordance with 92C of the I.T.Act, 1961 read with Rule 10B & Rule 10C of the I.T.Rules, 1962 (the Rules). 2. Whether on the facts and in the circumstances of the he Ld. CIT(A) has erred in undertaking adequate 'comparability' analysis and 'reliable and accurate adjustments' to account for differences between international loan transaction and comparable uncontrolled transaction as envisaged under transfer pricing provisions. 3. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) has erred by rejecting 3 comparables out of 10 comparables selected by the TPO under TNMM on the basis of F....
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....taken up by the learned AO in completing the impugned assessment. 5. Before us, the assessee is represented by Shri S.K. Tulsiyan, Advocate and Ms. Lata Goyal, ACA and the Department by Shri Tushal Dhawal Singh, CIT. 6. Brief facts as culled out from records are that the assessee is engaged in the business of manufacturing of crown closures, PP caps, metal containers, printed sheet, metals etc. and is also engaged in the trading of some of these products. The assessee filed its return of income for the impugned assessment year on 30/11/2014 declaring total income of Rs. 30,20,28,360/- under the normal provisions of the Act and at book profit u/s 115JB of the Act at Rs. 29,17,78,877/-. During the year under consideration, the assessee had entered into specified domestic and international transactions with its Associate Enterprises (AEs). Reference was made to the TPO by the learned AO for determination of Arms' Length Price (ALP) of specified domestic and international transactions undertaken by the Assessee. Ld. TPO passed an order u/s 92CA(3) of the Act dated 26/10/2017 making an upward adjustment of Rs. 45,31,72,852/-. Based on the order of the ld. TPO, the ld. AO has made ....
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....he TPO's contention and directed the ld. AO for application of PLI by adopting OP/TC method. 7.4 On the dispute relating to selection and rejection of comparable, the ld. CIT(A) noted that against the broad Functions, Assets, Risks (FAR) analysis as set out in the Transfer Pricing Study Report (TPSR), the ld. TPO has not disputed the same and by analyzing the set of comparables takne by the assessee, accepted the three comparable which were rejected by the ld. TPO and also, rejected the seven new comparables which were identified by the ld. TPO, thereby accepting all the comparables considered by the assessee in its TPSR for the purpose of benchmarking. In respect of the seven new comparables adopted by the ld. TPO, the Department has taken a ground vide Ground No. 3 (supra) wherein it is noted that ten comparables were selected by the TPO out of which three were rejected. It is noted that the TPO had taken only seven new comparables and not ten as challenged in the said ground. After dwelling on these two disputes, the ld. CIT(A) gave a direction to the ld. TPO/AO to re-work the PLI of the tested party and to re-compute the mean PLI of the comparables with reference to the acce....
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....ng to upward adjustment made in respect of interest earned on loan to AE referred in ground no. 1 and 2 (supra) is squarely covered by the decision of the Hon'ble c-ordinate bench of ITAT Kolkata in the assessee's own case for the Assessment Year 2011-12, 2012-13 & 2013-14 in ITA Nos. 980/Kol/2017 order dt. 30/11/2018 and ITA No. 208- 209/Kol/2018, order dt. 28/09/2018, copy of which is placed on record in the paper book. The learned counsel for the assessee apprised the Bench on the facts of this issue and submitted that the assessee had entered into an intercompany loan transaction with its AE viz., EuroAsian Ventures FZE. In the TPSR, the assessee had stated that it had earned interest income of USD 1,39,479.45 (equivalent to Rs. 82,70,076/-) @ 5% per annum on the USD loan amount. The interest rate charged by the assessee to its AE is based on LIBOR which is 155 bps. Hence, the assessee had charged interest @ LIBOR + 345 bps which was claimed to be at ALP. He further submitted that CUP method was selected as the Most Appropriate Method (MAM) duly reported in Form 3CEB, placed on record. The ld. Counsel for the assessee submitted that since the actual interest received from the A....
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.... Counsel for the assessee pointed out that while determining the ALP of its international transactions of sale of goods to MINL Limited, Dynateh Industries Ghana Ltd. and Jebba Paper Mills Ltd., ld. TPO has taken the figures of sales at Rs.349,41,52,817/- in the TP order. However, the correct amount stands at a figure of Rs.339,01,06,861/- which is evident from the appendix to the TPSR and from Form 3CEB forming part of the paper book. We take note of this factual correction. The ld. Counsel for the assessee submitted that with reference to the upward adjustment of Rs.40,77,88,000/- on account of international transactions of sale of goods to AEs and downward adjustment of Rs.2,30,13,000/- on account of domestic purchase of raw material by the assessee from AE, the ld. TPO has nowhere specified as to how the assessee has applied cherry pick method in selecting the comparables so as to reject the analysis of the assessee, as alleged by the ld. TPO. It was further submitted that the filter applied and method adopted by the assessee for the competition of PLI have been duly specified in para 6.3. and para 6.4 of the TPSR, already on record. The ld. counsel for the assessee further con....
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.... assessee thus placed strong reliance on the findings given by the ld. CIT(A) on the acceptance of the three comparables which were originally rejected by the ld. TPO and also on the rejection of the seven new comparables identified by the ld. TPO. 12. In respect of the cross objection of the assessee, the ld. counsel for the assessee pointed out that the ld. TPO has applied different functions while computing the PLI in respect of the two comparables out of the set of nineteen comparables identified by the assessee, namely, DCM Engineering Ltd. & Dee Dee Steel Castings Ltd. for which excise duty has been taken as part of the operating revenue resulting into a higher level of PLI and distorting the PLI adopted for the purpose of benchmarking. To this effect, the ld. counsel for the assessee invited the attention of the Bench to page no. 61 of the paper book, wherein the operating profit margin of 3.34% has been worked out on the basis of operating revenue taken at Rs.57,072.40 lakhs which was further corroborated from the note no. 18 of the audited financial statements for the year under consideration placed at page number 17 of the paper book. In note no. 18 of the audited fina....
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....PLI by the assessee was computed after reducing the excise duty from sales, the same should have been followed in the case of all the comparables adopted for determining the ALP of the transactions. The ld. TPO has not maintained consistency within the comparables by including excise duty in two cases and excluding it in all other seventeen cases. The ld. counsel for the assessee referred to the chart for computation of PLI of the comparables accepted by the ld CIT(A) which is taken after netting off the excise duty. The same is placed at page 324 of the paper book, which is extracted below for ready reference:- Computation of PLI after netting off excise duty Comparables Turnover (Inclus. of Excise duty) Excise duty Net turnover (OR) OC Profit OP/OR OP/TC Alom Extrusions Ltd. 174.18 17.33 156.85 152.27 4.58 2.92% 3.01% Ankit Ispat (P.) Ltd. 50.87 0 50.87 47.76 3.11 6.11% 6.51% Banco Aluminium Ltd. 218.36 23.02 195.34 180.5 14.84 7.60& 8.22% Besco Ltd. 221.01 7.52 213.49 210.2 3.29 1.54% 1.57% Century Aluminium Mfg. Co. Ltd. 556.92 66.44 490.48 4....
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....ge in the facts except for the quantum. Further, we find that the assessee had benchmarked the transactions of loan given to its AE by applying CUP method as mentioned in the TPSR. The assessee has obtained the prevailing LIBOR rates by applying external CUP method and considered itself as the tested party for the purpose of benchmarking the transactions. We note from the TPSR that the assessee has earned interest income of USD 1,39,479.45 (equivalent to Rs.82,70,726/-) @ 5% per annum on the USD amount which is based on LIBOR + 345 bps. 13.3 The 'C' Bench of ITAT Kolkata in the assessee's own case in ITA No. 980/Kol/2017; Assessment Year 2012-13, order dt. 28/09/2018, while adjudicating the identical issue, had held as under:- "4.1. Ground No. 1, is against the deletion of upward adjustment of s.6,97,64,000/-, towards Arm's Length interest on loan given to associated enterprises. During the course of assessment proceedings, the Assessing Officer made a reference to the Transfer Pricing Officer (TPO) for calculation of arm's length interest rate in respect of loan advanced by the assessee company to its Associate Enterprise (AE), EuroAsian Ventures FZE. ....
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....allowed accordingly." As the ld. CIT(A) has followed the propositions of law laid down by different benches of the Tribunal on this issue, we find no infirmity in the same. The Kolkata Bench of the ITAT has in a number of cases including M/s. EIH Ltd. vs. DCIT (supra) followed the same principles. Hence the order of the ld. CIT(A) on this issue is upheld and Ground No. 1 of the revenue is dismissed." 13.4 Since the issue is already covered and has been dealt extensively by the Co-ordinate Bench of the ITAT Kolkata in the assessee's own case and the Department has failed to suggest any exception on facts or law involved in the Assessment Year under consideration, we respectfully adopt the detailed reasoning given by the Co-ordinate Bench (supra) and accordingly dismiss the ground/s relating to this issue raised by the Department in its appeal. 13.5 On the issue of adjustment made in the fees for corporate guarantee for AE, on the perusal of the audited financial statements of the assessee, we failed to understand from where and how the ld. TPO has figured out that the assessee has issued corporate guarantee for its AE and proceeded to benchmark @ 3.125% and arrive at ....
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....as against which the ld. TPO has considered OP/OC to be the most appropriate PLI. The ld. CIT(A) has given a finding that application of PLI as OP/OC is the most appropriate PLI and has directed the ld. TPO / AO to re-compute and re-work the PLI and the mean of PLI of the comparables. The assessee has not challenged this finding of the ld. CIT(A) and we do not find any reason to interfere with the finding given by the ld. CIT(A) to this effect. Accordingly, the PLI is to be computed on the basis of OP/OC. In respect of the issue relating to selection and rejection of comparables identified by the ld. TPO and by the assessee, we find that the ld. CIT(A) has meritoriously dealt with the matter by taking note of the FAR analysis and the economic analysis undertaken by the assessee in its TPSR which the ld. TPO failed to undertake in respect of the seven new comparables identified by him. We find force in the submissions made by the ld. Counsel of the assessee in respect of selection and rejection of comparables noted above. Accordingly, on this specific issue also we do not find any merit in interfering with the factual findings given by the ld. CIT(A). 13.8 On the third issue rela....