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2022 (12) TMI 865
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....That the Learned Dispute Resolution Panel ("Ld. DRP") ignored the judicial pronouncements and erred in dismissing the grounds of objections raised by the Appellant and upholding the adjustment proposed by the Ld. AO/ Learned Transfer Pricing Officer ("Ld. TPO") without providing any cogent reasons for the same. 3. That the Ld. AO erred in computation of the demand against the order passed u/s 143(3) r.w.s 144C(13) of the Act. The Ld. AO erred in considering the amount of Tax deducted at source/ Tax collected at source credit ("TDS/TCS credit") to be INR 42,392,755 instead of INR 96,255,133 and INR 43,851 respectively as mentioned in the income tax return of the Appellant. Transfer Pricing 4. That the Ld. AO/ Ld. TPO/ Ld. DRP erred in enhancing the income of the Appellant by INR 1,153,540,461/- pertaining to the contract manufacturing segment that do not satisfy the arm's length principle envisaged under the Income-tax Act, 1961 ("the Act") and in doing so, have grossly erred in: 4.1. erroneously rejecting the economic analysis undertaken by the Appellant in the Transfer Pricing ("TP") documentation maintained by it in terms of section 92D of ....
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.... 5.1. On the facts and circumstances of the case and the law, the Ld. AO/ Ld. DRP erred in proposing disallowance of INR 24,733,027/- towards claim under section 80G of the Act during the subject year, and holding that the contributions towards Corporate Social Responsibility ("CSR") of the Appellant were not eligible for the said deduction under section 80G of the Act. 5.2. That the Ld. AO/ Ld. DRP failed to appreciate that CSR expenditure is disallowed only under section 37 of the Act and which does not restrict the Appellant from claiming deduction under any other provisions of the Act. 6. Disallowance of Voluntary Retirement Scheme Claim 6.1. On the facts and circumstances of the case and the law, the Ld. AO/ Ld. DRP erred in disallowing the deduction claimed by the Appellant under 35DDA of the Act and enhancing the income of the Appellant by INR 22,04,576/- 6.2. That the Ld. AO/ Ld. DRP failed to appreciate that, the Appellant had disallowed the entire amount paid under the VRS scheme paid during the year in the Income tax computation of Af 2017-18 and claimed only 1/5th portion of the expense as deduction, in accordance with section....
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....chneider Electric IT Business India Private Limited ("SEITB India" or "the Appellant" or "the Company") is a wholly owned subsidiary of Schneider Electric IT Corporation USA ("Schneider US" or "SEITC"). SEITB India is primarily engaged in the manufacture of power protection equipment and undertakes trading of uninterrupted power supply ("UPS") and related accessories. 2.1 The activities undertaken by SEITB are summarized as follows: Contract Manufacturing - The assessee procures certain raw materials and components from AEs and third parties which is used in manufacturing of UPS products and accessories and exports them as finished products to its AEs. Solution Business segment - The Company manufactures UPS products locally as per the requirements of the domestic market. For such UPS products, the Company procures battery and other ancillary components domestically and sells the UPS products within the domestic market as an overall package which includes associated sales and warranty support to its customers. It is imperative to note that solution business segment is a third party business segment with no involvement of AEs. Distribution segment - SEITB India imports f....
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....dings 2.4 In the contract manufacturing segment, the Appellant is engaged in the business of manufacturing of UPS products and accessories for which certain raw material and components are imported from its AEs and certain raw materials are sourced locally from third parties in India. SEITB India exports the manufactured UPS products and accessories to its AEs 2.5 During the course of TP assessment proceedings, the Ld. TPO adopted the following approach for benchmarking Appellant's international transactions with respect to contract manufacturing segment: 1. Fresh search for comparables based on application of additional/ modified filters: The Ld. TPO rejected the economic analysis undertaken by the assessee in its TP documentation and undertook a fresh search based on additional /modified filters. Thus, the Ld. TPO selected a set of 6 companies with a percentile range of OP/TC of 7.75% to 9.19% and median of 8.47% for benchmarking contract manufacturing segment of the assessee. 2. Fresh search undertaken by the assessee: The Ld. TPO didn't appreciate the fresh search undertaken by the assessee during the assessment proceedings and rejected the same ....
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....on dated March 23, 2022. The Assessee also filed an application for keeping the demand recovery proceedings in abeyance vide application filed before the Ld. Assessing Officer on March 23, 2022, and the Hon'ble ITAT on March 24, 2022. 2.9 The Assessee does not agree with the approach adopted by the Ld. TPO/ Ld. DR' Ld. AO and submits that the Ld. TPO/ Ld. DRP/ Ld. AO have erred in rejecting the arm's length computation of the assessee as detailed in the TP documentation. 3. Ground Nos.1 to 3 are general in nature, which do not require any adjudication. 4. Ground Nos.4.1, 4.2 & 4.7 are not pressed. Accordingly, dismissed as not pressed. 5. Ground No.4.3 is reproduced below:- "4.3 erroneously rejecting the audited segmental accounts furnished by the Appellant by arbitrary allocating operating specific expenses on the basis of revenue earned by the Appellant in each segment which were originally allocated by the Appellant on sound allocation keys. Thus, the Ld. AO/ Ld. TPO/ Ld. DRP erred in considering the margin of the Appellant in contract manufacturing segment as 1.79% as against the actual margin of 7.70%:" 5.1 The Ld. A.R. submitted that assess....
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....y dissimilar companies/ companies failing quantitative filters on arbitrary/ frivolous grounds; 4.5.1.ehneously including a functionally dissimilar comparable, Amara Raja Power Systems Private Limited, that fails related party filter less than 25% and manufacturing income/sales greater than 75% filter, on arbitrary / frivolous grounds; 4.5.2.Inadvertently including Genus Power Infrastructure Limited, a functionally dissimilar comparable in the final set in place of Genus Innovation Limited, a comparable selected by the Appellant and accepted by the Ld. TPO; 4.6. erroneously excluding certain functionally similar companies on arbitrary/ frivolous grounds; 4.6.1.Inadvertently excluding Genus Innovation Limited, a functionally similar comparable accepted by the Ld. TPO, and including Genus Power Infrastructure Limited in the final set; IT(TP)A No.185/Bang/2022 Schneider Electric IT Business India Pvt. Ltd., Bangalore Page 12 of 17 7.1 The crux of the above grounds is with regard to the inclusion and exclusion of certain comparables. 8. We have heard the rival submissions and perused the materials available on record. We have perused the grounds befo....
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.... deduction under any other provisions of the Act. 11.1 The contention of the Ld. A.R. is that the assessee has disallowed the CSR expenditure u/s 37 of the Act and requested that the same may be considered for deduction u/s 80G of the Act. 11.2 We have heard the rival submissions and perused the materials available on record. After hearing both the parties, we are of the opinion that the claim of the assessee has to be examined by the Ld. DRP on production of the requisite details by the assessee. The Ld. DRP also directed to consider the order of the Tribunal in the case of First America (India) Pvt. Ltd. in ITA No.1762/Bang/2019, wherein held that "assessee cannot be denied benefit of claim of deduction under Chapter VIA of the Act in relation to payments, which form part of CSR expenses since that would lead to double disallowance, which is not the intention of legislature." Accordingly, this issue is remitted to the file of Ld. DRP for fresh consideration. 12. Next ground No.6 is with regard to expenditure incurred on Voluntary Retirement Scheme. This ground of appeal is reproduced as under:- 6. Disallowance of Voluntary Retirement Scheme Claim 6.1. On the ....
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....receipt of income which is not includible in the total income during the relevant previous year. 7.5.That the Ld. AO/ Ld. DRP erred in holding that Section 14A is automatic and it comes into operation as soon as the dividend income is claimed exempt, without taking into cognizance that no dividend income has been earned during the year. As no income has been claimed as exempt, the provisions of Section 14A are not applicable in the instant case. 13.1 The argument of the Ld. A.R. is that assessee has no exempted income as such there cannot be any disallowance u/s 14A of the Act. 13.2 The Ld. D.R. submitted that even though there is no expenditure has been incurred, AO has to presume that there was incurring of expenditure u/s 14A read with Rule 80D(2) of the Income Tax Rules and for that purpose he relied on the order of the Tribunal in the case of Technopark Advisors Ltd. Vs. ACIT reported in 50 SOT 31 (Del.) 13.3 We have heard the rival submissions and perused the materials available on record. In our opinion, if there is no exempted income, there cannot be any disallowance u/s 14A read with Rule 8D of the I.T. Rules. Accordingly, we remit this issue to the file ....