TaxTMI 
TaxTMI 
2023 (6) TMI 1280
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....dition to the income of the Appellant by holding that the international transactions undertaken by the Appellant do not satisfy the arm's length principle envisaged under the Income-tax Act, 1961 ('Act'). 2. The Ld. CIT(A) erred both on facts and in law in confirming the Ld. AO/ Transfer Pricing Officer's action of considering APITCO Ltd as comparable company to that of Appellant without appreciating following: 2.1. APITCO is not functionally comparable with that of Appellant as APITCO is engaged activities which are not remotely near to activities performed by Appellant. Thus, functional, asset and risk profile of APITCO is not comparable with Appellant 2.2. APITCO was incorporated as M/s Andhra Pradesh Industrial and Technical Consul Organization Limited and is held by Government Corporations, Financial Institution Government Banks and works in areas which are predominantly government initial like skill development, tourism development, cluster development, environment management etc. 3. Without prejudice to above, APITCO should be rejected as said company is engaged number of government activities like skill development, tourism development, cluster devel....
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....; Total 81,34,504 3.1. The facts, in brief, regarding the impugned addition(s) made by the Ld. AO/ TPO are outlined herein below: A. As regards the addition made on account of transfer pricing adjustment under section 92CA read with section 92C of the Act to the tune of Rs. 38,94/442 (i) During the Financial Year ended on March 31, 2012, the Appellant has entered into international Transactions as tabulated below:- S. NO. Nature of international Transactions Method used Value In INR 1 Professional services from AE TNMM 1,45,60,590 2 Professional services to AE 3,69,92,624 3 Reimbursement of expenses to AE in connection with services performed 3,11,747 4 Receipt of Share Application Money No benchmarking required 2,20,00,000 5 Reimbursement of expenses to AE 1,04,71,698 Abbreviation used: TNMM - Transactional Net Margin Method (ii) In order to justify that the above said transactions are at arm's length, the Appellant considered Transactional Net Margin Method (TNMM) as the most appropriate method with Operating profit/ Operating Cost as the Profit Level Indicator (PLI) at the time of Transfer Pricing Documentation. The same remains undisputed by ....
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....the Appellant while identifying new comparable companies, and identified such comparables, which are functionally dissimilar to the Appellant. * Proceeded to determine the proposed adjustment on the total transaction rather than considering only the international transaction. * Non-cognizance with the consideration of notional interest (on ad-hoc basis) on outstanding receivables proposed by Ld. TPO for the purpose of benchmarking of outstanding receivables. (viii) In response to the show cause notice issued by the Ld. TPO, the Appellant submitted detailed submission on 19 January 2016 in order to put forth the fact that no adjustment was warranted to the international transactions pertaining to professional Services to/from AE and Reimbursement of expenses in connection to the services performed as being proposed by the Ld. TPO. The arguments placed upon by the appellant in the submission are given below: * Details of financial data required by the Ld. TPO (along with the relevant extracts of Profit & loss account and relevant schedules) * Chart giving the brief description of the functions of comparables identified by the Ld. TPO suggesting their functional dissimilarit....
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.... Appellant duly filed a detailed submission before the Ld. AO vide letter(s) dated 14.01.2015, 19.02.2016 and 02.03.2016 wherein the Ld. AO was duly apprised of the factual matrix and the applicable law in respect of the instant case as mentioned in Point No. (ii) herein above. (v) However, the Ld. AO disregarded the submissions made by the Appellant and placing reliance upon the CBDT's Circular 22 of 2015 dated 17.12.2015, thereby proceeded with the impugned disallowance to the tune of Rs. 42,40,062 under section 36(1)(va) of the Act. 4. Aggrieved by the aforesaid addition made by the A.O. /TPO in the assessment order, the assessee filed an appeal before the CIT(A) and the ld. CIT(A) vide order dated 28/06/2019 rejected the comparables added by the TPO except APITCO. Aggrieved by the acceptance APITCO as comparable by the CIT(A), the assessee preferred the present appeal on the grounds mentioned above. 5. The Ground No. 1 is general in nature which requires no adjudication. Ground No. 2 & 3 are regarding considering the APITCO as comparable Company. The Ld. Counsel for the Assessee submitted that the said company does not satisfy the functional comparability criterion adop....