TaxTMI 
TaxTMI 
TaxTMI 
2025 (8) TMI 204
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....43(13) and 144B of the Income Tax Act, 1961 (for short "the Act") inconsonance with the order passed by the Dispute Resolution Panel (DRP) dated 30.11.2023 u/s 144C(5) and order passed by Transfer Pricing Officer (TPO) under section 92CA(3) dated 19.12.2023 for AY 2020-21. 2. The assessee has raised the following grounds of appeal:- "1. On the facts and circumstances of the case, the order passed by the Ld. Assessing Officer (AO) is bad both in the eye of law and on facts. 2. On the facts and circumstances of the case, the Ld. AO has erred, both on facts and in law, in making assessment at an income of Rs. 1,12,41,198/- as against NIL income declared by the assessee. 3. On the facts and circumstances of the case, the Ld. AO/TPO have ....
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....are general in nature and does not require any specific adjudication. 4. Ground Nos. 3 to 6 raised by the assessee are only challenging the transfer pricing adjustment of Rs. 1,11,76,537/- made on account of arm's length price difference on sale of the traded goods. 5. We have heard the rival submissions and perused the material available on record. The assessee is a company engaged in the business of trading of ball bearing components. The assessee company was incorporated in May 2014 and is a subsidiary of SC URB Rulmenti [(associated enterprise) (AE)] and engaged in trading of all types of bearings. The AE is worldwide supplier of bearings and provides services in the rolling bearing business and is located in Romania. The assessee has....
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....g loss % -35.46% 7. By this process, the ld TPO tinkered with the assessee's reported margin of 6.24% and substitute the same with (-) 35.46%. The ld TPO rejected all the comparables chosen by the assessee in its TPSR and took 15 fresh comparables and arrived at the median of 13.68%. Accordingly, ld TPO proposed an arm's length price adjustment on sale of traded goods to AE of Rs. 1,11,76,537/- worked out as under:- Particulars Amount in Rs. Operating Cost (A) 2,80,40,048 Arm' Length Margin OP/OC (%)(B) 13.68% Arm's Length (C=A*B) 38,35,879 Arm's Length Revenue (D=A+C) 3,18,75,927 Operating Export Revenue (E) (as declared by assessee) 2,06,99,390 Difference between ALP and Operating Export Revenue (F=D-E) 1,11,76,537 Adju....
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....e profit and loss account voluntarily in the computation of total income as under:- Particulars Debited in profit and loss account Treatment given in computation of total income Purchase of stock in trade 1,92,40,624/- Claimed as deduction allowed by AO Employee benefit expenses 42,24,383 Voluntarily disallowed Other expenses 57,10,839 Voluntarily disallowed Exception items 17,44,59,099 Voluntarily disallowed 10. Employee benefit and other expenses of Rs. 99,35,222/- (4224383+ 57,10,839) debited in the profit and loss account and exceptional item of Rs 17,44,59,099/- had been suo moto disallowed by the assessee in the computation of income while filing the return. There was an abandoned project with regard to ball bearing ma....
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....; 4,15,682 4,24,454 4,15,682 8,772 4,24,454 Total 2,12,56,678 2,06,49,576 5,98,330 8,772 2,12,56,678 Cost of Material consumed . . Purchase of stock in trade 1,92,40,624 1,86,71,134 5,69,490 1,92,40,624 Change in inventory Employee Benefit expenses Salary Expenses 41,84,830 41,84,830 41,84,830 employee insurance benefit 39,553 39,553 39,553 Leave encashment Total Employee Cost 4....
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....e suitable modification in the final order. The ld TPO passed a giving effect order on 19.12.2023 to the direction of the ld DRP and erroneously stated in para 4.1 that the ld DRP had upheld the findings of the ld TPO. This, in our considered opinion, is factually incorrect and contrary to the directions given by the ld DRP vide page 6 in para 8.4.1 (iii) of the DRP‟s order. In any case, we find that the dispute raised by the ld DRP was only with regard to capital expenses vs. revenue expenses. The genuinity of incurrence of such expenses towards the trading activity and abandoned project was not doubted. As stated earlier, the ld TPO had taken the indirect expenses in proportion to the export revenue to total revenue and had allocate....