2023 (12) TMI 984

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ar (AY) 2012-13. 3. Via the instant appeal, the appellant/revenue has assailed order dated 24.03.2023 passed by the Income Tax Appellate Tribunal [in short, "Tribunal"]. 4. To adjudicate the instant appeal, the following facts must be noticed. 5. The respondent/assessee filed its Return of Income (ROI) for the AY in issue, i.e., AY 2012-13, on 30.11.2012. The ROI declared a loss amounting to Rs. 5,58,25,905/-. 6. The record shows that the respondent/assessee's case was referred to the Transfer Pricing Officer (TPO) under Section 92CA of the Income Tax Act, 1961 [in short, "the Act"]. The TPO, via order dated 27.01.2016, proposed an upward adjustment amounting to Rs. 4,76,89,336/- concerning international transactions pertaining ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ate the cost incurred by the respondent/assessee in the deployment of employees concerning AEs and non-AEs. 11.1 Mr Rai, thus, submitted that the method adopted by the TPO, whereby costs of salaries were allocated based on turnover was the correct approach. 12. As regards the rejection of the comparable, it is Mr Rai's contention that adequate information was available and that Korus could have been used to benchmark the subject international transaction, contrary to what has been held by the Tribunal. 13. Mr Ajay Vohra, learned senior counsel, who appears on behalf of the respondent/assessee, on the other hand, submitted that the expenses incurred on account of the deployment of employees were available project-wise. 13.1 It is....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....more than the average PLI of the comparables furnished by the respondent/assessee, i.e., 9.23%. Based on this, the respondent/assessee had stated that the transaction with the AEs was at arm's length. 17. Concededly, what bothered the TPO was the computation of the operating cost, though he was also concerned with some of the comparables furnished by the respondent/assessee. 18. As indicated above, the TPO's view was that there was opaqueness with regard to allocation of operating expenses concerning salaries paid to employees who worked in the AE and non-AE segment. It is on account of this view that the TPO concluded that expenses incurred on salaries which are part of the operating expenses had to be allocated based on the turn....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....behalf of the respondent/assessee as to how the functional profile of the Korus was different from its own, accepted Korus as a comparable without doing a deep-dive. 21.2 The respondent/assessee had emphasised that Korus was in the business of providing engineering services to steel industry, right from the stage of conceptualization to commissioning. Furthermore, the respondent/assessee had said that Korus also provided engineering consultancy for greenfield steel plants, technology upgradation and expansion projects. The DRP, while dealing with the assertions made by the respondent/assessee simply stated the following: "functionally comparable should therefore be retained." 22. According to us, the DRP made no attempt to establish a....