TaxTMI 
TaxTMI 
2024 (12) TMI 549
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....h section 144C(4) of the Income-tax Act, 1961 ('Act') and order dated 27 January 2015 issued by Transfer Pricing Officer ('TPO') u/s 92CA(3) of the Act, is bad in law and void ab-initio. Transfer Pricing General 2. That on the facts and circumstances of the case and in law, the learned CIT(A) erred in confirming transfer pricing adjustment made by learned AO/ TPO on account of provision of business support services by the Appellant to its Associated Enterprises ('AEs'). 3. That on the facts and circumstances of the case and in law, the learned CIT(A) erred in confirming the rejection of the transfer pricing documentation maintained by the Appellant in accordance with the provisions of the Act read with the Income-tax Rules, 1962 ('Rules'), and allowing undertaking a fresh economic analysis during the course of assessment proceedings, thereby holding the adjustment made by learned AO/ TPO to the international transactions as valid. Error in computation of net margin of the Appellant 4. That on the facts and circumstances of the case, the learned CIT(A) erred in considering interest on short term loans of Rs. 54,28,741 as part of operating ....
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....Auctioneers Private Limited. Use of different financial year filter 13. That on facts and circumstances of the case and in law, the learned CIT(A) erred in upholding the use of different financial year end filter for rejecting comparable companies while undertaking the fresh economic analysis. Use of multiple year data 14. That on facts and circumstances of the case and in law, the learned CIT(A) erred in rejecting the use of multiple year data and using data for FY 2010-11 only. Adjustment for risk differences 15. That on the facts and circumstances of the case and in law, the learned CIT(A) erred in disregarding the risk profile of the Appellant vis-a-vis alleged comparable companies selected by the learned TPO and not allowing risk adjustment under the provisions of Rule 10B(1)(e) of the Rules. 16. That on the facts and circumstances of the case and in law, the learned CIT(A) has erred in disregarding the working of risk adjustment submitted by the Appellant under the Capital Asset Pricing Model. Arm's length range of 5% 17. That the learned AO be directed to re-work the profit margins of the Appellant vis-à-vis the resultant comparable companies and....
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....parable with the assessee, therefore, they are required to be excluded. In this regard, the Ld. AR had filed a written submission in support of his contention, which is to the following effect : "Exclusion of comparable companies chosen by TPO - Ground no. 9 In this Ground, the appellant is seeking exclusion of the following four companies: a) Empire Industries Ltd b) India Cements Capital Ltd c) HSCC(India) Ltd d) Kitco Ltd. Empire Industries Ltd. * This company is in the business of manufacture of glass bottles for pharma industry - Page No. 599 of Paper book * The company has reported two segments, namely Manufacturing, Trading & Indenting - Page No. 627 of Paper book * The TPO has erroneously considered the Trading & Indenting activity as purely "indenting" activity and has held that it is in the nature of business support services akin to the appellant's services * There are several decisions of the Hon'ble Tribunal that Empire Industries is not comparable to purely service providing companies * In the case of Hitachi Data Systems for AY 2011-12,, which was a service providing entity ( copy of the order at S.No. 1 of the case law compendium), th....
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....Company and shares are held by Government of India and The President is authorised to issue directives - Page 696, 701, 711 and 713 of Paper Book - The company has MoU with Ministry for more than a decade- Page 699 of Paper book - The functions A.O. this company are architectural planning, Design Engineering & Project Management Services, not comparable with the support services of the appellant - Page 705 of paper book - This company has been specifically excluded from the set of comparables, for being a Govt company (Bechtel India at vi) above) KITCO - Functionally dissimilar and Govt Company - This is a Government connected company as share capital is held by SIDBI - Page No. 785 of paper book - The company is into various activities like Project consultancy, Management consultancy and training, Engineering assignments and Technical services - Page 789 of paper book - The above services are functionally different from that of the support services of the appellant - This company has been excluded being a Government company, in a plethora of decisions, as mentioned above." 6. On the other hand, the Learned Department Representative ("Ld. DR") had drawn our attenti....
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.... 2407.10 2609.81 Total Result 4626.93 4631.87 Unallocated Expenditure Net of unallocated income (339.78) (380.47) Interest Expenses (448.10) (625.25) Interest income 177.04 73.76 Dividend income 0.05 0.05 Profit before Taxation 4616.14 3699.96 Provision for Taxation 1162.83 1116.69 Net profit 2853.31 2593.27 N. NOTES TO THE ACCOUNTS (Contd.) Other Information Segment Assets Segment Liabilities 2010-11 2009-2010 2010-2011 2009-2010 Manufacturing 4558.68 4460.35 1,366.09 1,1941.41 Trading & Indenting 4606.17 3824.30 2010.37 1468.87 Others 14164.21 10678.99 9493.13 7518.47 Capital Expenditure Depreciation Manufacturing 30.84 47.86 213.09 215.14 Trading & Indenting 182.84 109.76 &....
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....n the part of the appellant to exclude India Cements only on the ground that it is showing better margin. Further, the related party transactions are less than 25%, which is the filter universally used by the TPOs and hence, this cannot be a reason to exclude the Company. In view of the above, the objection of the appellant is rejected and this comparable retained. 9. HSCC (India) Ltd. The appellant has contended that HSCC is providing high-end technical consultancy services for architectural planning, design engineering, project management and procurement management services. It also provides studies and training services for medical colleges and feasibility studies for multi-specialty hospitals. Moreover, it does not provide any segmental data to differentiate between the design and architectural consultancy services vis-a-vis the project consultancy services. 9.2 The appellant company is providing consultancy services which is in the nature of business support services similar to the assessee company. Further, the profile of this comparable is similar to that of ICRA Management Consultancy which has also been selected by the taxpayer in its TP study. In view of the above, th....
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....or the pharmaceutical industry. Over 11.80 lakhs bottles are manufactured even-day on four fully automatic production lines. During the year under review demand for pharma bottles was good and the division achieved 9.16 per cent. higher turnover at Rs. 8361.14 lakhs. Over 20 per cent. of the bottles produced were exported." 24. In the case of Philip Morris Services India (supra), a co-ordinate Bench of this Tribunal found that Empire Industries Ltd. is engaged in the distribution and sale support of highly technical machines and pharmaceuticals, besides trading and day indenting of the industrial and medical equipment and machine tools, arid therefore, cannot be said as a comparables to the company rendering market support services. There is no dispute that the Empire Industries Ltd. is sought to be compared with the assessee in its marketing support services and the functional profile of this two companies do not match. A company primarily deriving its income from manufacturing/trading and indenting services cannot be a good comparable to a company rendering market support services. We, therefore, directed the deletion of this company from the list of comparables." The Ld.A....
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....mparable with that of the assessee. 7.1 We have heard both sides and perused the material available on record. In the light of the above, we are of the opinion that this company is not comparable with the assessee and therefore we exclude this company from the list of comparable companies. HSCC (India) Limited 8. With respect to HSCC (India) Ltd., the Ld. CIT(A) has rejected the contention of the assessee to exclude the company from the list of comparable by his observation contained in paras no. 9 & 9.2 of his order, which are reproduced as under : "9. HSCC (India) Ltd.: The appellant has contended that HSCC is providing high end technical consultancy services for architectural planning, design engineering, project management and procurement management services. It also provides studies and training services for medical colleges and feasibility studies for multi speciality hospitals. Moreover, it does not provide any segmental data to differentiate between the design and architectural consultancy services viz-a-vis the project consultancy services. 9.2 The appellant company is providing consultancy services which is in the nature of business support services similar to the ....
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....well as conducts training programmes, which is not comparable to low end business support services rendered by the assessee. 10.2 The appellant company is providing a consultancy service which is in the nature of business support services similar to taxpayer. Further, the profile of this comparable is similar to that of ICRA Management Consultancy which has also been selected by the taxpayer in its TP study. In view of the above, the objection of the assessee is rejected and this comparable is retained." 9.2 It was submitted by the Ld. AR that out of total revenue of Rs. 23.38 Crores; Rs. 12.92 Crores are from the construction contracts and it was further submitted that no segmental information for management consultancy services are available for this company. 9.3 Per contra, Learned DR, heavily placed reliance on the orders of the Revenue authorities and requested to uphold the order of the Revenue authorities. 9.4 We have heard both sides and perused the material available on record. Since in the present case, the profile of the comparable Kitco Ltd. is matching with that of the assessee and we do not find any infirmity in the order of Ld. CIT(A) and accordingly we reject t....
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.... export proceeds within a prescribed time limit. Further, assessee relied on the master circular on export of goods and services issued by the RBI under FEMA. The ld Assessing Officer rejected the contention of the assessee for the reason that according to section 10AA(8) which makes applicable sub- section 5 and 6 of section 10A to this section i.e. 10 AA of the act, and according to form No. 56F, the realization of export proceeds is required to be shown. In that form assessee has shown that full consideration in convertible foreign exchange for exports made by the undertaking was brought into in India within a period of 6 months from the end of the previous year. The auditor has also certified the above fact as correct. Therefore, the ld Assessing Officer considered the export turnover at Rs. 190912493/- instead of Rs. 265997897/- and computed the deduction at Rs. 42306994/. The ld DRP on objection by the assessee confirmed the action of ld Assessing Officer. Therefore, assessee is in appeal before us. 25. The ld AR reiterated the same argument as advanced before the lower authorities and ld DR vehemently relied upon the orders of lower authorities. 26. We have carefully con....
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....rought into India by the assessee. Hence, we confirm the finding of the lower authorities regarding disallowance of deduction under section 10 AA of the income tax act on this sum. With respect to the other sum of Rs. 4.80 crores The assessee has given foreign inward remittance certificates and such sum has also been received in India on 04/02/2011 and 24/2/2011. The provisions of section 10AA does not provide any time-limit of bringing such consideration into India like section 10A(3) which provides for receipt of consideration or sale proceeds in India in convertible foreign exchange within a period of 6 months from the end of the previous year, or within such further period as the competent authority may allow in this behalf. Further the contention of the revenue that provision of sub- section (5) and (6) of section 10A shall apply by virtue of the provision of section 10AA(8) of the Act. The provision of section 10A(5) speaks about the audit of the accounts and submission of report of an accountant in specified Performa. In this case same has been complied with by the assessee. Further section 10A(6) speaks about the restrictions of other deduction during the holiday period, wh....
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....f sales were happened in this year or not and whether the assessee is entitled to deduction u/s. 10AA of the Act or not. 10.3 We have heard both sides and perused the material available on record. Without commenting on the entitlement of the assessee, in case of failure on the part of assessee to receive the export sale proceeds within a period of six months, we deem it fit to decide first on the additional evidence filed before us in the Form 56F on 10.05.2024. In our view, the entitlement of the assessee u/s. 10AA of the Act is required to examine in the light of the duty cast on the assessee to fulfil the requirements as contemplated u/s.10AA(8) r.w.s. 10A (4 & 5) of the Act. A concise reading of the provisions make it abundantly clear that the assessee was duty bound to file the Form no. 56F before the specified date referred to in section 44AB. However the assessee has filed the said form before us on 10.05.2024, which is filed much latter that the specified due date. In our view the delay in filing the Form no. 56F after the specified date is not permissible as held by the Hon'ble Supreme Court in the case of DCIT Vs. Wipro Ltd. 446 ITR 001 (SC), wherein while deciding s....