AI Drafter 
TaxTMI 
TaxTMI 
2025 (8) TMI 746
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....he absence of jurisdiction as per the provisions of Section 144B, rendering the final assessment order to be null and void. The Appellant prays that the final assessment order is null and void being passed in violation of the law and deserves to be quashed. 2. Ground no. 2-The final assessment order passed by the Ld. AO is time barred. Without prejudice to above, on the facts and in the circumstances of the case and in law, the Final Assessment Order u/s 143(3) r.w.s 144C(13) of the Act dated 31 July 2022 is served on the Appellant on 3 August 2022 i.e. beyond the time limit prescribed u/s 144C(13) of the Act rendering the said order to be bad in law. The Appellant therefore submits and prays that the aforesaid order passed is bad in law and deserves to be quashed. 3. Ground no. 3 The final assessment order passed by the Id. AO has not been authenticated either through digital signature or physically. Without prejudice to above, on the facts and in the circumstances of the case and in law, the order passed by the Ld. AO has not been authenticated either through digital signature or physically thereby rendering the said order inv....
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.... in law, the Ld. TPO/DRP/AO erred in making an adjustment for provision of engineering and related services by: a) Disregarding the TP Study maintained by the Appellant in good faith and with due diligence; b) Rejecting the search process carried out by the Appellant in the TP Study; c) Disregarding the aggregation approach adopted by the Appellant by segregating the three divisions of the Appellant within the engineering and related services segment and thereafter applying the same benchmarking analysis to such segregated three divisions. d) Disregarding the treatment of foreign exchange loss as non-operating expense for the purpose of computation of PLL. e) Rejection of functionally comparable companies selected by the Appellant; f) Appellant is not privy to the source of the margins considered by the Ld. TPO/AO and working capital adjustment benefit not given. g) Not providing sufficient time to the Appellant to provide its submissions against the show cause notices issued by the Ld. TPO h) Disregarded the fact that the operating margins earned by the Appellant in this business segment is within the (+/-) 3%....
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....Act -INR 4,24,46,692 c) On the facts and in the circumstances of the case and in law, the Ld. DRP/AO erred in disallowing salary paid to an Indian Resident employee under section 40(a)(i) read with Section 195 of the Act to the total income amounting to INR 4,24,46,692. d) Without prejudice to above, on the facts and in the circumstances of the case and in law, the Ld. DRP/AO erred in not appreciating that tax had been correctly deducted under section 192 of the Act on the said salary payment. The Appellant therefore submits and prays that the aforesaid adjustment be deleted. 12. Ground no. 12 - Incorrect computation of interest under Section 234B of the Act On the facts and in the circumstances of the case and in law, the Ld. AO has erred in computing and levying interest of INR 6,17,63,988 under section 234B of the Act. The Appellant prays that the Ld. AO be directed to recompute the interest under Section 234B of the Act as per law and after considering the reliefs to be granted by your Honour in your Appellate Order. 13. Ground No. 13- Incorrect computation of interest under Section 234C of the Act On the f....
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....ission. The ld. DRP after considering the report of TPO various additions proposed by assessing officer and the submission of assessee, allowed part relief to the assessee in its direction dated 03.06.2022. On receipt of direction of DRP, the assessing officer passed final assessment order dated 31.07.2022, which is impugned before this Tribunal. 3. We have heard the submission of Learned Authorised Representative (ld. AR) of the assessee and submissions of the learned Commissioner of income Tax- departmental representative (ld. CIT DR) for the Revenue. With their assistance, we have also gone through voluminous documents and findings of lower authorities. Ground no. 1 relates to jurisdiction of assessing officer, ground no. 2 relates to passing assessment order beyond period of limitation, ground no. 3 relates to passing of assessment order which is according to assessee is not authentic and ground no. 4 is general. The ld. AR of the assessee submits that he is pressing ground no. 1 to 4. Considering the submissions of ld AR of the assessee, ground no. 1 to 4 of the appeal are dismissed as not pressed. 4. Ground no. 5 relates to transfer pricing adjustment in relation to pro....
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....exclusion of MPS Ltd., the ld. AR of the assessee submits that this comparable is not functionally comparable with the assessee. It is in diversified business and lack of segmental data. MPS is a leading global provider of platforms and content solutions for the digital world. It is India's only listed pure-play publishing services company. The company provides platforms and publishing services for global publishing industries. MPS is engaged in end to end print and digital solutions to its customers which include services e.g. content production, enhancement, transformation, delivery and customer support making it a trusted partner to the biggest publishers in the world. MPS has successfully positioned itself as a leading product developer for educational, academic and medical publishers and leaning companies. MPS is engaged in developing software projects for end-to-end cloud based publishing namely 'MPS Digicore' 'Digitrack', 'Content store' etc. About 82% of total turnover of the company is from providing content solutions in the form of production, transformation, customer support and 18% of total turnover from its platform solutions such as Digicore, THINK, and Scholar Star e....
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....2) (Pun Trib.). 6. For exclusion of Integra Software Services Pvt. Ltd. (Integra), the ld AR of the assessee submits that its mean margin is 12.79%. Integra is primarily engaged in publishing and pre-publishing of content. It is engaged in end to end digital content solutions, digital content solutions, development solutions to emerging disruptive content technologies such as augmented reality, virtual reality, etc. Integra has developed its own products namely 'iRight', iPMP' and 'iAuthor' for provision of effective content development and management for its users. These products aid in streamlining the project management, photo research, workflow of publishers. Integra also provides products which are powered by Natural Language Processing (NLP) and AI, that enable collaborative content authoring and editing. Accordingly, Integra is not functionally comparable to the assessee's ITES segment and hence, ought to be excluded from the final set. The assessee wishes to place reliance on the following decisions to support the above arguments: • Emerson Electric Company (India) Private Limited Vs ACIT (ITA No. 6098/Mum/2018 & ITA No. No. 531/Mum/2018 (Mum-Trib.), ....
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....more than 75% of sales. On the basis of aforesaid submission, the ld. AR of the assessee submits that if his submissions are accepted the final set of comparable would be 15 and their OP/TC would be in the following manner: Sr. No. Name of comparable company OP/TC margins (Pursuant to DRP directions) OP/TC (As per the appellant) 1 Access Healthcare Services Pvt. Ltd. 34.68% 34.68% 2 DKM Online Pvt. Ltd. 9.27% 9.27% 3 E Care India Pvt. Ltd. 19.28% 19.28% 4 Sundaram Business Services Ltd. 7.46% 7.46% 5 Surevin BPO Services Ltd. 18.61% 18.61% 6 Tech Mahindra Business Services Ltd. 18.80% 18.80% 7 CES Ltd. - IT Enabled Services 23.69% 23.69% 8 R Systems International Ltd. - Business process outsourcing service 8.85% 8.85% 9 Ultramarine & Pigments Ltd.-IT Enabled Services & BPO activity 35.91% 35.91% 10 Paddle Point BPO Services Pvt. Ltd. 15.79% 17.59% 11 Manipal Digital Systems Pvt. Ltd. (merged) 21.66% - 12 MPS Ltd. 59.91% - 13 Integra Software Services Pvt. Ltd. 12.79% - 14 Wizard E-Marketing Pvt. Ltd. 13.01% ....
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....over from its platform solutions such as Digicore, THINK, and Scholar Star etc. Further, in assessee's own case for A.Y. 2013-14 and 2014-15, MPS was excluded. Therefore, the Assessing Officer / TPO is directed to exclude MPS from final set of comparable. Now turning to Manipal. Manipal is also engaged in diversified set of services such as CGI and digital services, packaging pre-press, image retouching, learning and publishing and has undertook pre-media and e-book distribution for its domestic customers. Thus, this comparable is not comparable with the assessee who is engaged in providing IT and related support services. Thus, Assessing Officer/TPO is directed to exclude money power from final set of comparable. For Integra, we find that this company has developed its own products namely iRight, iPMP and iAuthor for provision of development and management of its users. Its products aid in streamlining the project management, photo research, workflow of publishers. It also provides Natural Language Processing (NLP) and Artificially Intelligence (AI) that enable collaborative content authoring and editing. Thus, it is not comparable with the assessee company which is ITES and relat....
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....the basis of such direction, the TPO recomputed arm's length median margin at 19.18% which led to adjustment of Rs. 94,48,951/- in final assessment order. The ld. AR of the assessee submits that he has limited prayer to include two comparable company in final set of company which includes UBM India Private Limited (UBM) and MCI Management India Pvt. Ltd. (MCI). The ld. AR of the assessee submits that UBM satisfied related party transaction filter. For the year under consideration, the ld. TPO in his order has applied a RPT filter while selecting comparable companies and has excluded those companies whose related party transactions are significant. The ld AR of the assessee submits that the ratio of RPT is less than 25% i.e. 15.31%, 9.78% and 12.16% for FY 2015-16 & 2016-17 and FY 2017-18 respectively. Accordingly, UBM ought to be included in the final set of comparable companies as it does not fail RPT filter applied by the ld. TPO. Accordingly, he submits that UBM ought to be included in the final set of comparable companies. 13. For MCI Management India Pvt. Ltd., the ld,. AR submits that MCI was accepted as a functionally comparable company for MSS segment in the assessee's o....
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....fact, we direct the Assessing Officer/TPO to follow the order of Tribunal in A.Y. 2017-18 and recompute the adjustment accordingly. In the result, ground no. 7 is allowed. 19. Ground no. 8 relates to TP adjustment in respect of manufacturing segment. The ld. AR of the assessee submits that the assessee has a manufacturing division in Nasik namely Emerson Engineering Export Centre (EEEC-Nasik), which is a 100% export oriented unit, registered with STPI, set up in 2016 and is engaged in manufacturing of electronic cabinets, panels including system cabinets, marshalling cabinets and power distribution panels, components and parts of electronics cabinets, panels. The manufacturing segment had incurred losses and capital expenditure for setting up the factory and installation of the production lines in its start-up phase i.e. during FY 2017-18 which is also the first year of full-fledged operations. Due to the initial year, the capacity utilisation achieved by the assessee was only 30%. The assessee benchmarked the manufacturing segment by adopting Transactional Net Margin Method as the most appropriate method and after conducting certain economic adjustments as per Rule 10B(1)(e) of....
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....sulted in higher depreciation cost in compassion to the comparable companies were established companies. The assessee's cost of depreciation is 10.60% of the total cost whereas depreciation as a percentage of total cost of comparable companies is 1.90%. The ld. AR of the assessee prayed for allowing depreciation adjustment. In other alternative submissions, the ld. AR of the assessee submits that depreciation cost of assessee for its manufacturing segment is 10.60% in comparison with depreciation and cost of comparable companies at 1.90%. In order to make an appropriate comparison and eliminate material differences it would be prudent to eliminate depreciation cost and cash profit margin of assessee and that of comparable companies used of cash profit level indicator for benchmarking transaction under dispute. The use of cash PLI would eliminate the impact of differences in respect of technology, age of assets used in production, capacity utilisation and depreciation expenses and its policies on profitability of the comparable companies and assessee to support such submission, the ld. AR relied upon the following case laws: • CIT Vs Reuters India (P) Ltd. (2016) 69 ....
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....expenses under section 14A of Rs. 20,06,601/-. The ld. AR of the assessee submits that during the year under consideration, the assessee has not earned any exempt income and hence no disallowance under section 14A ought to be made. The ld. AR of the assessee also invited our attention on computation of total income which is available at page no. 233 of volume I of paper book. The ld. AR submits that recently in Emerson Electrical Company (India) Ltd. Vs ACIT in ITA No. 555/Mum/2022 and Delhi High Court in PCIT Vs Era Infrastructure (India) Ltd. in ITA No. 204/2022, it was also held that when there is no exempt income earned during the year. No disallowance under section 14A is warranted. 23. On the other hand, the ld. CIT DR supported the order of lower authorities. 24. We have considered the submissions of both the parties. Considering the fact that during the year assessee has not earned any exempt income, therefore, no disallowance under section 14A to be made as has been held in a series of decision by various High Courts including in PCIT vs Era Infrastructure (India) Ltd. (Supra). In the result, this ground of appeal is allowed. 25. Ground no. 10 relates to addition ....
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....ter XVII-B of the Act. However, in the present case, the assessee duly deducted tax at source under Chapter XVII-B as per section 192 and deposited with the with the treasury of Government. The ld. AR of the assessee by inviting our attention on section 40, stress that disallowance under this section can only be made if the tax is not deducted as per Chapter XVII-B. The assessing officer exceeded his jurisdiction and changed the characterisation of the payments to Mr. Zullo by erroneously alleging that there exists no employer relationship between Mr. Zullo and assessee and that he was providing services in the nature of fees for technical services on behalf of the assessee group. It is settled position in law that in absence of any material or evidence, the assessing officer cannot said on the chair of assessee. The assessing officer has not brought any material on record to show that conduct of assessee is contrary to the submission made. Action of assessing officer is in contravention of law and hence disallowance made by him is unwarranted and liable to be deleted. 27. On the other hand, ld. CIT DR for the Revenue supported the order of lower authorities. The ld. CIT DR for ....