TaxTMI 
TaxTMI 
2023 (3) TMI 1020
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.... view of the explanation provided by the Appellant, delay of 10 days in filing the appeal is condoned. Accordingly, we proceed to examine the appeal on merits. The Appellant has raised following grounds of appeals: "1. Under the facts and in law, the Hon‟ble CIT(A) has erred in confirming the addition of Rs. 1,79,98,287/-. 1.1 The Hon‟ble CIT(A) confirmed the addition concluding that invocation of section 92CA was justified and hence the addition made by the learned A.O. 1.2 Further, the Hon‟ble CIT(A) failed to appreciate the fact that following adjustments are to be considered before determining the comparability of the selling price between Associate Enterprise and Non-Associate Enterprise: a) Giving concession for different sales circumstances. b) Conducting FAR analysis 2. Under the facts and in law, the Hon‟ble CIT(A) has erred in confirming the addition of unsecured loans of Rs. 18,00,000/- (incorrect stated as 18,98,287/-) as unexplained cash credit u/s 68 of the Income Tax Act, 1961. 2.1 Inspite of appellant submitting all the supporting for unsecured loans, the Hon‟ble CIT(A) erre....
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....g adjustment of INR.1,79,98,287/- in respect of sales made to AE in USA taking margin of 16.68% on cost of sales (margin in case of sales made to Non-AEs in Europe) computing the same as under: A Total direct costs in respect of sales to the AE 15,92,70,155 B Arm‟s Length margin (margins on sales to non AE) 16.68% C(A*B) Arm‟s Length profit based on above 2,65,66,262 D(A+C) Arm‟s Length value of sales 18,58,36,417 E(D*95%) 95% thereof 16,78,38,130 G(D-F) Adjustment 1,79,98,287 3.2. The transfer pricing adjustment of INR 1,79,98,287/- proposed by the TPO order, dated 30.10.2008, was incorporated by the Assessing Officer in Assessment Order, dated 23.12.2008, passed under Section 143(3) of the Act. 3.3. Further, the Assessing Officer also made an addition of INR 72,50,000/- under Section 68 of the Act treating the following unsecured loans as unexplained cash credit in terms of Section 68 of the Act: Name of the Lender Amount (INR) - Shri Pravin Kumar Jain 22,50,000 - Jain International 5,00,000 - Radhika Woolen and Silk Mills Pvt. Ltd. 30,00,000 - Rawmet Commodi....
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....ival submissions and perused the material on record. We note that for the Assessment Year 2006-07, the TPO had made transfer pricing adjustment taking the rate of gross margin on cost of sales made by the Appellant to Non-AEs in Europe as the basis for determining ALP of the sales made to AEs in USA by using cost plus method as the most appropriate method. The approach adopted by the TPO was rejected by the Tribunal and issue was remanded back to the TPO holding as under: "9. We have heard both the parties and their contentions have carefully been considered. We have carefully gone through the order passed by TPO. We could not understand that how TPO has arrived at the figure of 35.18% margin in the cases of non-AE sales. Such calculation is not made part of the TPOs order. Ld. DRP also did not give any reason to reduce the rate of 35.18% to 30% and same has been reduced in adhoc manner. As against these actions of TPO and DRP, it is the case of the assessee that on similar transaction in earlier years no TP adjustment is made and the matter has to be considered in right perspective. 9.1 We observe that the assessee has applied Cost Plus Method which has been acce....
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....unts and bank statements filed before the CIT(A) as additional evidence (placed at page 69 to 84 of the paper-book), the Learned Authorised Representative for the Appellant submitted that the aforesaid documents were filed before CIT(A) to establish genuineness of the transaction. However, the CIT(A) treated the unsecured loans as not genuine based upon conjecture and surmise. Per contra, the Ld. Departmental Representative submitted that loan of INR 3,00,000/- taken from Radhika Woolen & Silk Mills Pvt. Ltd., and INR 15,00,000/- taken from Rawmet Commodities Pvt. Ltd. cannot be treated as genuine since the lenders were neither related to the Appellant nor any goods were purchased or sold by the such lenders. Thus, the lenders had no motive/purpose to give loans to the Appellant as observed by the CIT(A). 9. We have considered the rival submissions and perused the material on record. We are not inclined to accept the approach/reasoning adopted by CIT(A) to hold the unsecured loans aggregating to INR 18,00,000/- were not genuine. The CIT(A) had accepted the identity and creditworthiness of the parties since the CIT(A) had only doubted the genuineness of the transaction and the re....