TaxTMI 
TaxTMI 
2024 (1) TMI 23
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....r passed under subsection (3) of section 92CA: and (ii) any non-resident not being a company, or any foreign company." Therefore, the variation referred in subsection (1) of 144C should arises as a consequences of the order passed by the Transfer Pricing Officer under section 92CA (3) and the assessee should be a non-resident. Therefore, both the conditions are cumulative and are mandatory to be covered under the term "eligible assessee". In our case, there was no order of the TPO in terms of section 92CA(3). The Ld. AO neither referred the matter to the TPO nor made any adverse comment on the benchmarking of the international transaction with the AE on cost plus 15% as submitted by the appellant assessee through TP report and other various submissions. 2. Because the impugned assessment order passed by the Ld. AO time barred and beyond the limitation as per section 153(1). This provision 153(1) mandates that the assessment order under section 143 should be passed within 18 months from the end of the assessment year. Since this matter was not referred to the TPO in of section 92CA, therefore the extension of 12 months will not be available the revenue. Therefore, the assessme....
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....d. DRP both erred in not appreciating the real income theory. Once the assessee has entered an arrangement with the AE under cost plus 15% benchmarking and that has not been disputed, the AO attempted to tax the hypothetical income of Rs 94,00,617 which never accrued to the assessee. 7. Because the Ld. AO and subsequently Ld. DRP both erred in not appreciating that the credit note adjustment was for the purpose of benchmarking of the international transaction with the AE under the Income Tax laws and has nothing so do with the GST. The basis of GST returns is as per the GST law and not as per the Transfer pricing provisions of Income tax. Once the assessee has complied the TP provisions for the purpose of benchmarking the international transaction and recognized the revenue accordingly, there was no occasion for the Ld AO to rely on the GST return figure without appreciating the different basis of reporting under different law. 8. Because the Ld. AO and subsequently Ld. DRP both, has erred in not appreciating that the all the inward and outward entry in the SEZ Area must passed through the checking of another wing of Ministry of Revenue Le, custom department and the SEZ authori....
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....he above issues including additional document submitted from the AO. The AO submitted as under: * During the course of assessment proceedings, discrepancy amounting to Rs. 94,00,617/- was noticed between the export sales declared by the assessee-firm in its profit and loss account and in its sales ledger. In order to explain the discrepancy, the assessee had submitted a debit note amounting to Rs. 94,00,617/-. Having realized its mistake, the assessee later submitted a credit note of the same amount issued on the same date. The selfcontradiction in the replies of the assessee makes it evident that the assertions of the assessee are not genuine and it has deliberately attempted to misguide the tax authorities to suppress its sales and evade its taxes in India. The actual sales of the assessee are Rs. 10,36,95,673/- and not Rs. 9,42,95,056/- as declared by the assessee in its return. Further, it is emphasized that the assessee has reported the correct figure of sales revenue i.e. Rs. 10,36,95,673/-in its GSTR-9 and has not reconciled any amount of credit/debit note while reporting the sales revenue in GSTR-9 which was filed on 26.02.2021 much later than the date on which the credit....
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.... invoices needs further verification. * The expenses amounting to Rs. 1,38,893/- claimed as advertisement and publicity were proposed to be disallowed as the assessee had itself agreed that the same has been wrongly booked. 8. The assessee has filed its rejoinder to the remand report before the ld. DRP, the salient points are as under: * The details of such credit or debit which are as under: AY Sales as per Export Invoice Debit Note Credit Note Sales Turnover as book Corresponding Sales reported in ITR 2015-16 8,40,98,173 18,59,2757 10,26,90,930 10,26,90,930 2016-17 10,15,89,776 74,47,605 10,90,37,381 10,90,37,381 2018-19 9,78,41,160 1,16,47,255 8,61,93,905 8,61,93,905 2019-20 10,08,77,863 1,53,78,981 8,54,98,882 8,54,98,882 2020-21 10,36,95,673 94,00,617 9,42,95,056 9,42,95,056 2020-21 8,38,27,355 54,24,110 8,92,51,465 8,92,51,465 * It was submitted that the TP Study report was always on cost plus 15% benchmarking and it has always been regularly assessed under section 143(3) by the department. * Before the ld. DRP, the assessee has submitted through its TP St....
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....0 CTR 419 (SC). * Therefore once the transaction is at Arm Length between the assessee and the AE and there is no dispute on that part, the credit note which has been issued to achieve such benchmark only and not be rejected on the basis mere clerical error or not matching with any other law which is not consistent with the TP provisions. 9. Disallowance of Purchase amounting to Rs. 4,38,039/- on the allegation that such a purchase is a bogus purchase. * The AO has alleged that the purchase to the tune of 4,38,039/- is bogus purchase and the list of such purchase are as under: S.No. Vendor Name Amount Remarks 1 HK International 13,542/- Supplier of glass accessories 2 Rajveer Singh 37,792/- Supplier of Glass. 3 Manvi Food 50,657/- Supplier of food for staffs 4 Shri Sai Freight 2,81,614/- Forwarding Agent service. Certificate was enclosed (Page-394) 5 The software warrior 30,000/- Service provider for Systems 6 Bhagirathi Plastic 22,5341- Supply of Packing material 7 Dream Valley Store 1,900/- Grocery Supplier for canteen Total 4,38,039/- 10. These are small vendors supplying the ancillary goods, groce....
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....s promotion expenses mainly incurred by the assessee for the refreshment of the office guest and vendors. The ledger of the said expenses is enclosed in the Page 450 to 479 of the Volume-2 of the document submitted and the supporting documents are enclosed. From the analysis of the ledger, it comes out that these expenses are petty expenses incurred for the purpose of Business only. Merely some of the vouchers are handwritten does not make such entry as false as all these expenses are supported by evidence and for the business purpose only. 13. After going through the remand report and the rebuttal of the assessee, the ld. DRP held that "on the issue of credits notes of Rs. 94,00,617/-, it is seen that the credit note and debit note are been inserted by the assessee for account reconciliation which is not backed by actual transaction. Some of the argument to justify the credit notes being put forward by the assessee was on account of pricing difference with the parities. In fact with the issue of credit note the assessee sale figure of Rs. 9,42,950,56/- in the IT return is not reconciling with the correspondence figure of sales of amount Rs. 10,36,95,673/-disclosed by the assessee....
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.... of DIT (International Taxation) Vs. Morgan Stanley as reported in 292ITR 416(SC). We find that the assessee has consistently benchmarked its international transaction with the cost plus @ 15% markup and it has been consistently accepted by the department during the assessment procedure and has passed the assessment order u/s 143(3). The AO erred in not appreciating that issuance of credit note / debit note was a regular year end feature of the assessee to achieve such benchmarking of mark -up. Once such transaction is held to be at ALP, no further addition /attribution can be made to the assessee income. The settlement of account of the assessee from A.Y. 2015-16 to A.Y. 2020-21 by the way of credit notes and debit notes has been already taken note and mentioned in the table in the preceding paragraph and repeated here. AY Sales as per Export Invoice Debit Note Credit Note Sales Turnover as book Corresponding Sales reported in ITR 2015-16 8,40,98,173 18,59,2757 10,26,90,930 10,26,90,930 2016-17 10,15,89,776 74,47,605 10,90,37,381 10,90,37,381 2018-19 9,78,41,160 1,16,47,255 8,61,93,905 8,61,93,905 2019-20 10,08,77,86....