TaxTMI 
TaxTMI 
2025 (5) TMI 693
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....e period of widespread pandemic, i.e., COVID-19, the holding company of the assessee incurred a heavy loss on account of its high financial exposure and accordingly, went into liquidation under the foreign laws. Pursuant to the order to initiate the insolvent voluntary winding up of M/s Phoenix Global DMCC (supporting document 1 enclosed as Annexure I), the Joint Liquidators were appointed in UAE for the Holding Company in June, 2020. One of the Liquidators also resigned from the Liquidator position in March, 2021. Subsequently, the one of the erstwhile Directors of PCL Foods resigned on 6th May, 2021 and another erstwhile director passed away on 8^th May, 2021. Further, the then financial controller/ Accountant of the Company also resigned from the company on 11^th May, 2021 without sharing any documents and details of the Company. The Assessee Company was left without any books and records. After various follow ups and legal proceedings and pursuant to the order of National Company Law Tribunal, New Delhi (copy of order enclosed as Annexure II), new directors were inducted on the Board of the Company in February, 2021, who also left the Company subsequently in July, 2021 due to u....
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.... initio in view of the fact that the notice dated 02. 12.2021 [DIN & Notice No: ITBA/COM/F/ 17/2021- 22/ 1037445143(1)] issued by Ld. TPO in this regard sought to rectify the adjustment proposed in the transfer pricing order dated 29.01.2021 forming part of draft assessment order and not the transfer pricing order dated 25.10.2021 passed by Id. TPO giving effect to the directions of Hon'ble DRP. Mistake apparent from records in Id. AO rectification order 3. That, without prejudice to any other ground, the Ld. AO grossly erred on facts and circumstances of the case in inadvertently determining the total income at Rs. 25,71,74,004/- instead of Rs. 15,16,78,329/- thereby making an inadvertent addition of Rs. 10,54,95,675/- in the computation sheet annexed with rectification order and raising the consequential demand of tax and interest thereon. 4. That of the difference of Rs. 10,54,95,675/- mentioned in ground taken herein above, a difference of Rs. 2,28,52,648/- is on account of the returned loss of the assessee not considered by the Id. AO and the remaining difference of Rs. 8,26,43,027/- is as a consequence of making transfer pricing adjustments twic....
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..... 5. That the Id. DRP has erred in law and in facts and circumstances of the case, in directing the Ld. TPO/AO to treat export incentive as non-operating item while computing the PLI of the appellant. Adjustment for interest free advances 6. That the ld. TPO/DRP and consequently the Id. AO have grossly erred in facts and in law in not granting the adjustment in respect of interest free advances granted by the AE to the assessee. Application of CUP method using TIPS database 7. That the Id. DRP has grossly erred in law and in facts and circumstances of the case in not even adjudicating the grounds of objections relating to application of TIPS database prices as comparable data under direct method viz. CUP method. The Id. DRP and consequently the Id. TPO/ld. AO have erred in law in not passing a speaking order in respect of above ground. 8. That Id. TPO/DRP and consequently the Id. AO have grossly erred in not appreciating that transaction listed on TIPS database are product-wise and functionally similar with the assessee's international transactions. Further Id. TPO/DRP and consequently the Id. AO have erred in not appreciati....
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....dents the computation of proportionate transfer pricing adjustment is as under:- Particulars Amount Operating cost 7199733468 Arm's Length Margin OP/OC 3.96% Arm's Length Margin 285109445 Arm's Length Revenue 7484842907 Operating Revenue 7263166510 Difference 221676397 International Transaction 4232682932 Proportionate International Transaction 58.28% Proportionate adjustment 129184138 The Assessing Officer will accordingly enhance the income of the taxpayer by Rs. 129184138/-. This shall be treated as the adjustment u/s 92CA of the I. T. Act, 1961." In view of above, the total income of the assessee is enhanced by Rs. 129184138/- by way of adjustment u/s 92CA(3) of Income tax ACt,1961. [Addition: Rs. 129184138/-] 5. In this case draft assessment order u/s 143(3) r.w.s 144C of Income tax was passed on 21.03.2021 and same was served upon the assessee company online electronically. The assessee company has filed objections before the Hon'ble DRP. The Hon'ble DRP has issued its directions u/s 144C (5) dated 22.09.2021. The Ld. TPO has given appeal effect to the ....
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....as under: Particulars Amount Total Revenue 7,32,77,88,700 Less: Non Operating Revenue 92,37,640 Interest Income 38,09,209 Export Incentive 21,83,214 Excess Provision Written back 13,800 Miscellaneous Income 32,31,417 Operating Income 7,31,85,51,060 Total Cost 7,29,37,76,549 Less: Non Operating Cost 7,20,79,004 Finance Cost 14,16,491 Donation 5,00,000 Exchange Flunctuation 7,01,23,859 Fixed asset w/o 38,654 Operating Cost 7,22, 16,545 Operating Profit 9,68,53,5115 OP/OC 1.34% Therefore, OP/OC of the assessee after giving effect to the Hon'ble DRP's direction is revised to 1.34%. However, as per Rule 10CA(7) & Rule 10CA(4), the average of the comparables after giving effect to the Hon'ble DRP's directions comes to 3.32%. Accordingly the adjustment is made with the revised margin of 3.32% as given below- Particulars Amount Opening Cost 7,22, 16,97,545 Arm's Length Margin OP/OC 3.32% Arm's Length Margin 23,97,60,358 Arm's Length Revenue 7,46, 14,57,903 Operating Revenue 7,31,85,51,060 Differen....