TaxTMI 
TaxTMI 
2025 (3) TMI 1081
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....s taken up for scrutiny. Notice under section 143(2) of the Act dated 29.08.2011 was issued. Notice under section 142(1) of the Act dated 15.12.2011 along with a questionnaire was issued. Shri Jatinder Singh and Ms. Shweta Kapoor, C.A. & Authorized Representative for appellant/assessee attended proceedings. The company had entered into international transaction with associated enterprises. A reference was made to the Transfer Pricing Officer (TPO) to determine the Arm's Length Price (ALP) of the International Transactions. The TPO passed order dated 29.01.2014 under section 92CA(3) of the Act relating to business support services at Rs. 3,05,42,857/- by making addition of Rs. 83,69,069/-. On completion of assessment proceedings learned AO made additions of Rs. 20,00,04,372/- on account of advance from customers Rs. 7,05,290/- on account of advance written off Rs. 83,69,069/- on account of transfer pricing and Rs. 1,95,53,494/- on account of depreciation vide order dated 30.04.2014. 3. Against assessment order dated 30.04.2014, appellant/assessee preferred appeal before the learned CIT(A), which was partly allowed vide order dated 03.11.2015. 4. Being aggrieved, appellant/asse....
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....ut affording opportunity of being heard to the assessee. The order as such is vitiated in law. 5. That the learned CIT(A) has erred in upholding the addition of Rs 83,69,069 to the total income, on account of Transfer Pricing ("TP") adjustments in respect of international transactions of 'commission received with its Associated Enterprise viz. ThyssenKrupp Elevators (Shanghai) Co. Ltd. ("the AE"). 5.1 That the learned CIT(A) has failed to understand the functions performed by the assessee in respect of the transaction of 'commission received'. 5.2 That the learned CIT(A), based on irrelevant considerations, has erred in holding that the assessee has provided 'Technical/ Business Support Services' to the AE, as against 'Business/ Market Support Services' held by the AO on the same facts. 5.3 That the learned CIT(A) has erred in rejecting the comparables filed by the assessee, based on his erroneous observation that the functions performed by the assessee in respect of transaction of commission received are not similar to the functions performed by the comparable, without appreciating that the learned AO had himself cons....
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....ut prejudice to the other grounds, the learned CIT(A) has erred in not approving entity level comparison of profits of the assessee with the entities engaged in the business of elevators, escalators, etc. in which the assessee is engaged. 6. That the learned CIT(A) has erred in confirming levy of interest u/s 234B, 234C & 234D." 5. Learned Authorized Representative for appellant/assessee submitted that Ground of appeal Nos.1 & 2 are general in nature. 6. Learned Authorized Representative for appellant/assessee regarding ground of appeal nos.3 & 3.1 & 3.2 submitted that learned CIT(A) failed to appreciate that the issue of "advance received from customers' was decided in favour of the assessed for A.Υ. 2005-06, Α.Υ.2006-07, Α.Υ. 2007-08 by the Tribunal. 6.1 This issue is covered in favour of the TKEI by order of Delhi High Court for A.Υ. 2005-06 (Annexed as annexure -1 at Pg. 9-10) and A.Υ. 2006-07 (Annexed as annexure -2 at Pg. 11-12) and A.Υ. 2007-08 (Annexed as annexure -3 at Pg. 13-14). 6.2 This is also covered by ITAT in Assessee's own case for A.Y 2009-10. Copy of Order annexed as Annexure -4 at P....
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.... the matter may be referred to TPO/AO. 11. From examination of record in light of aforesaid rival contentions, it is crystal clear that the Ground No. 3pertains to "advance received from customers" under the contracts entered into by the assessee, which does not constitute revenue/income of the relevant assessment years. Ground No.3.1relates to "advances from Customers" represents initial advance received on signing the contract (Reflected as 'Current Liabilities' in B/S ) Rs. 17.07 crores. Ground No.3.2 pertains to "deferred revenue" represents unadjusted advance received through Progress Billing in the case of new installation and significant modernization jobs, in respect of which revenue is yet to be recognized the basis of on percentage completion method in terms with Accounting Standard(AS-7) (Reflected as deferred revenue in B/S) Rs. 2.9 crores and Ground No.3.3relates to "Deferred Revenue (Maintenance Contracts)" represents unadjusted advance received through Progress Billing in respect of maintenance contracts, the term of which has yet to expire at the end of the relevant financial year. (Reflected as deferred revenue in B/s) Rs. 21.99 crores. 11.1 Learned CIT(A) in....
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....t of Section 37(1) of the Act. The appellant assessee had no means to recover and were written off under the head. However, in view smallness of the amount vis-à-vis income of Rs. 14,77,79,575/- of the assessee, the assessee claim for disallowance to be allowed as business loss as it pertains to revenue field on account of security deposit for participating in tenders. 14. Accordingly, Ground No. 4 of the assessee's appeal is allowed. 15. Ground No.5 pertaining to addition of Rs. 83,69,069/- on account of Transfer Pricing Adjustment. Appellant had undertaken International Transactions with its associate enterprises during the financial year as under: International Transactions during A.Y. 2010-11 International Transaction Method Amount (in INR) Import of Components and spares TNMM 32,541,569/- Export of Components and spares TNMM 128,064/- Import of elevators / escalators CUP, 154,723,184/- Provision of services TNMM 23,970,222/- Agreement with Thyseen Krupp Elevator Australia Pty. Ltd. For installation, testing and commissioning of elevators, escalators & travelators CUP 179,053,589/- Other Transaction ....
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....opment &research. (see page 319 of TP Vol-II). As the functions are entirely dis-similar & incomparable with the functions of the assessee this should be excluded as a comparable on this ground alone. This company was excluded as a comparable by Hon'ble ITAT from the list of comparables as functionally dissimilar in A.Y. 2010-11 to the companies providing market support services to it's AE in the following cases. Reliance is placed on: i) Tech Micro India(Ltd) vs DCTT (2015) 64 taxmann.com462 (Del)(Trib) (Para 7 at pages 46-47 of DPB) ii) Kobelco Cranes India Ltd. vs. ITO [2016) 70 taxmann.com3 (Del-Trib) (Para 8.3 atpgs. 69-70 of DPB) ii) Addidas Technical Services (P.) Ltd. vs. DCIT [2016] 69 taxmann.com 401 (Delhi-Trib) (Para 8.3(a) at pg. 73J of DPB) 2. Global Procurement Consultants Ltd (A.R Pgs. 377-430 of TP Vol-II) This company is also not a fit comparable as its functions are totally dissimilar. Attention is invited to Pg. 384 of TP Vol-11 wherein it is clear that this company is engaged in providing consultancy services and procurement processes in the area of health which is funded by World Bank. ....