TaxTMI 
TaxTMI 
2024 (5) TMI 494
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....Ld. CIT (A) erred in law and on facts in confirming disallowance u/s. 35D of Rs. 59,38,487/- (being 1/5th of Rs. 2,96,92,435/-). Ld. CIT(A) ought to have considered the fact that out of total expenses of Rs. 2,96,92,435/-, Rs. 16,55,644/- (1/5th of Rs. 82,78,218/-) is eligible u/s. 35D(2) of the Act and ought to have allowed capitalization for balance Rs. 2,14,14,000/- (Rs. 2,96,92,435.00 - Rs. 82,78,218.00). It be so held now. 2. Ld. CIT (A) erred in law and on facts in confirming disallowance of employees' contribution to provident fund of Rs. 14,448/- u/s. 43B of the Act. 3. Ld. CIT (A) erred in law and on facts in confirming addition of Rs. 2,42,26,184/- made by Ld. TPO u/s. 92CA(3) of the Act by affirming TPO'....
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....applied at entity level then average margin falls within +/- 5% price band provided in Section 92C of the Aet and accordingly there is no question of additions in ALP of international transaction. 10. Both lower authorities ought to have allowed deduction u/s. 10B of the Act after adjustment of addition/disallowance made as per CBDT Circular No.37 of 2016. 11. Appellant craves leave to add, alter, amend or delete any of the above grounds at the time of hearing of this appeal." 3. The return of income was filed by the assessee on 29.09.2010 declaring total income of (-) Rs. 2,12,79,622/-. The assessee company is engaged in the business of manufacturing of Slit Tape Woven Fabrics and Trading of Nonwoven Fabrics. The case ....
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....essment Order, the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee. 5. As regards to ground no.2, the Ld. AR submitted that in the light of decision of Hon'ble Apex Court in the case of Checkmate Services (P.) Ltd. vs. CIT-1 (2022) 448 ITR 518, the said ground is against the assessee. Hence, ground no.2 is dismissed. 6. As regards to ground no.1 related to total expenses of Rs. 2,96,92,435/- out of which Rs. 16,55,644/- (1/5th of Rs. 82,78,218/-) which is eligible under Section 35D(2) of Act should have been allowed as capitalisation for balance of Rs. 2,14,14,000/-, the Ld. AR submitted that the CIT(A) has not at all considered the alternative plea of the assessee while deciding the issue....
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....nsaction was not justified on the part of the TPO as the TPO himself has accepted CUP as most appropriate method for the same set of transactions carried with the Associated Enterprise (AE) in preceding years. The Ld. AR further submitted that the assessee being manufacturer has entered into specific long-term selling contracts with AE and by following CPM a higher profit margin earned by the assessee as compared to most appropriate comparable companies. In fact, the TPO himself has accepted CPM as the most appropriate method for same set of transactions carried out with AE in preceding year as well as subsequent year and accordingly should have accepted the CPM on principle of consistency in benchmarking. The Ld. AR further submitted that ....
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....per as the assessee though claimed has not carried out any adjustments on account of bulk quantity discount and customs duties, the purchase price paid to AE was still lower as that paid to unrelated party. Since the factors of comparability that are required to be examined for determining a comparable uncontrolled transaction are specifically provided in the Income Tax Rules and such adjustments have admittedly not been carried out by the assessee, therefore, the CIT(A) has rightly concurred the view of the TPO in respect of rejecting the CPM method. 11. We have heard both the parties and perused all the relevant material available on record. From the perusal of records, it is seen that the assessee had two units in respect of Moraiya A....