TaxTMI 
TaxTMI 
2025 (9) TMI 1193
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.... Section 143(1) of the Act. The case was selected for scrutiny. Notice under Section 143(2) dated 25.08.2011 was issued. Ms. Amit Vasudeva, CA appeared on behalf of the assessee company attended assessment proceedings, filed submissions and details etc. Draft assessment order under Section 144C(1) of the Act was passed on 14.02.2014. Period of 30 days for filing objections to DRP was up to 16.03.2014. The assessee had not intimated about filing of objection to Ld. DRP. So, Ld. AO vide order dated 21.04.2014 made addition of Rs. 67,69,727/-. 3. Against order dated 21.04.2014 of Ld. AO, the appellant/assessee filed appeal before Ld. CIT(A) which was partly allowed vide order dated 18.11.2016. 4. Being aggrieved, the appellant/assessee preferred present appeal with following grounds of appeal: "General Ground 1. The Hon'ble CIT(A)/ Deputy Commissioner of Income-tax-18(1), New Delhi ('learned AO') erred in adjusting the total taxable income of the Appellant for Assessment Year ('AY') 2010-11 instead of accepting the income offered by the Appellant in the income tax return for the subject AY under normal provisions of the Act. Your Ap....
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.... complying with the transfer pricing documentation requirements. Your Appellant prays that the economic analysis undertaken by the Appellant using 3-year weighted average data of comparables, in accordance with the provisions of the Act read with the Rules, should be upheld. Appellant's comparable companies rejected by the Hon'ble CIT(A)/ learned TPO 7. The Hon'ble CIT(A)/ learned TPO erred in rejecting Aditya Birla Minacs Worldwide Limited, Datamaties Financial Services Limited and Axis IT & T Limited as comparable companies on the premise that only companies having an export turnover exceeding 75% should be considered comparable to the Appellant for its international transaction of provision of IT enabled services. 8. The Hon'ble CIT(A)/ learned TPO erred in rejecting the company Caliber Point Business Solutions Limited on the premise that companies having a different accounting years cannot be considered comparable. 9. The Hon'ble CIT(A) erred in rejecting the company Microland Limited by alleging that the company having turnover of less than one crore should not be considered. Your Appellant prays that th....
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.... 15. The learned AO on the basis of above arbitrary additions made during the assessment proceedings under Section 143(3) of the Act initiated penalty proceedings under Section 271(1)(c) of the Act. 16. The Appellant is sanguine that the above additions are contrary to the factual positions and bad in law and will not be tenable on legal grounds and thus penalty provisions under Section 271(1)(c) of the Act cannot be invoked. Therefore, the learned AO is unjustified in initiating penalty proceedings as above. Your Appellant prays to please direct the learned AO to drop the penalty proceedings initiated under Section 271(1)(c) of the Act for the subject AY". 5. Learned Authorised Representative for the appellant/assessee regarding ground of appeal no.9, submitted that Ld. CIT(A) erred in rejecting/excluding Microland Limited by alleging that the company was having turnover of less than Rs. 1 Crore should not be considered. Copy of audited financial statement of Microland Limited for financial year ending 31.03.2010 page nos. 621 to 662 of the paper books mentions that the turnover of the company at Rs. 134,15,67,000/- [at page nos. 624 to 659] of the pape....
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....marketing and advertisement activities carried out by the comparable companies result in creation of marketing intangible, which would give return on such investment. In other words, the expenses incurred on advertisement and marketing creates a marketing intangible. Learned TPO rejected this contentions on the ground that such an argument is not based on any substantial analysis. The assessee made reference to WIPRO & Flex Tronic Software System and submitted that these companies have created marketing intangible, therefore, they are earning more profit then any other captive entity. Learned TPO rejected the contention of the assessee on the ground that 95% of the revenue of Infosys is from repeat business. The marketing intangible did not help Infosys to get any better business according to the learned TPO. On an analysis of the learned TPO's order coupled with the contentions of the assessee, we are of the view that learned TPO has rightly observed that in the case of manufacturing or distribution companies marketing expenses over a period of time may create marketing intangible which will helpful to them for getting better business but it may not be applicable with equal fo....
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.... is contention of the assessee company that VITL has employee-cost at 1.38% of its revenue when compared to that of the assessee company which is at 52.12%. Thus, the VITL cannot be considered as comparable company and to be excluded from the list of comparable companies. It is also an alternate contention of the assessee that VITL owns valuable intangible when compared to the assessee company. Hence, the said company has to be excluded. The assessee company itself agreed before the TPO that VITL is a comparable company offering IT enabled services and this company is an extension of one Indian company Amex IT Ltd., having agreed so it is not correct on the part of the assessee company to raise a new plea that the VITL has got low wages compared to the assessee company. It appears that the VITL has outsourced the manpower and the cost of outsourcing appears to have been included in the other heads of the expenditure instead of wages-employee cost. Moreover, the intangibles will not materially affect the price or profit earning. By outsourcing the manpower, the VITL would have incurred more cost compared to the assessee company, thus resulting in lesser operating profit. But, having....