TaxTMI 
TaxTMI 
TaxTMI 
2022 (4) TMI 1667
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....ed AO/TPO have erred in law and on facts in upholding the adjustment of INR 2,64,78,574 to the total income of the Appellant, based on the order, purportedly passed under section 92CA of the Act. 2.2. The Honourable DRP and the learned AO/TPO have erred in law and on facts by rejecting without cogent reasons, the transfer pricing ("TP") documentation which was prepared by the Appellant in the manner contemplated under the relevant provisions of the Act and the Income-tax Rules, 1962 ("Rules"). 2.3. The Honourable DRP and the learned AO/TPO has erred in law and on facts in rejecting certain comparable companies selected in the TP study of the Appellant based on certain unreasonable criteria's, including reasons which are contrary to the facts and circumstances. 2.4. The Honourable DRP and the learned AO / TPO has erred in law and on facts in rejecting the use of multiple year data by the appellant, without considering that the past year's data had an influence on the determination of arm's length price and that the appellant had considered contemporaneous data available at the time when it carried out the benchmarking study having regard to the....
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....s (ie commission income) without appreciating that these are part of one segment/ integrated business of the Appellant ie distribution of Tektronix products. 2.9.2. The Honourable DRP and the learned AO/TPO failed to appreciate that the aggregation approach be followed, as all the transactions are closely linked and intertwined to the distribution of test and measurement products carried out by the appellant and form a single class of transactions. Therefore, for the purpose of applying TNMM all the said streams of income had to be aggregated and benchmarked together. 2.9.3. The Honourable DRP and the learned TPO have erred in not following the approach adopted by the Learned TPO himself in AY 2009-10. 2.10. Without prejudice the above, the Honourable DRP and the learned AO/TPO have erred in not considering that the appellant's transactions would be at an arm's length even under the segmented approach adopted by the learned TPO, if the allocation of expenses to the segments is considered on a more accurate or appropriate basis. 2.11. The Honourable DRP and the learned AO/TPO has erred, in law, by not providing the appellant the benefit of....
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....icting the addition to INR 21,17,979 which is the amount debited to the profit and loss account during the year. 5.3. The Honourable DRP and the learned AO have erred in facts by failing to consider the decision of the Appellant's own case for the AY 2006-07 wherein the Hon'ble Income-tax Appellate Tribunal ("ITAT") had held that the warranty reserves computed on a scientific basis is a deductible expenditure. 6. Addition of balance in accrued expenses 6.1. The Honourable DRP and the learned AO have erred in law and on facts by making an addition of INR 13,18,258 which was appearing as accrued expenses in the balance sheet, by treating it as contingent liability without appreciating the fact that such amount was not even debited to the profit and loss account for the year. 6.2. The Honourable DRP and the learned AO have further erred in treating the same as prior period expenses without understanding the facts of the case and dis-regarded the evidences submitted in this behalf. 7. Disallowance of expenses for non-deduction of tax at source 7.1. The Honourable DRP and the learned AO have erred in law and on facts by disal....
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....ssue. 9.3. The learned AO has erred on facts by not appreciating the fact that the amounts pertained to amounts offered to tax in the return of income for AY 2011- 12. 10. Disallowance of expenses by treating the same as capital expenditure 10.1. The Honourable DRP and the learned AO have erred in law and on facts by disallowing an amount of INR 56,235 as capital expenditure without appreciating that the same was suo-moto disallowed by the appellant in the return of income; 10.2. The Honourable DRP and the learned AO have erred in law and on facts by making an addition of an amount of INR 5,02,611 incurred for replacing one of the servers, and hence qualified as revenue expenditure. 10.3. Without prejudice to the above ground, the learned AO has erred in law and on facts by allowing depreciation at the rate of 15 percent instead of 60 percent which would be the applicable rate for computers, even if the disallowance was to be accepted. 11. Short grant of Tax Deduction at Source ("TDS") credit 11.1. The learned AO has erred in law and on facts in short granting TDS claimed in the return of income by INR 3,76,101 and by i....
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.... the transaction of commission and warranty receipt and sale services from the distribution segment. The Ld. TPO used TNMM as the most appropriate method. Before the Ld. TPO, the assessee also referred to the decision of coordinate bench of this Tribunal for assessment in 2006-07 wherein, RPM was upheld to be the most appropriate method for distribution segment. It was also submitted that, this Tribunal noted categorically that, warranty provisions made on reasonable and scientific basis, would not affect RPM as the most appropriate method. The Ld. TPO however rejected the submissions of assessee and applied TNMM is the most appropriate method by holding that, the facts for year under consideration are different from the facts that was available at the time of disposal by this Tribunal. 2.7 He thus computed the margin of assessee for sales and service segment at -9.4% and 4 commission agency service segment at 41.03%. The Ld. TPO thus proposed an adjustment of Rs. 2,64,78,574/-with respect to purchase of goods from the associated enterprises and receipt of warranty service charges and related support charges. 2.8 On receipt of the order under section 92 CA, the Ld.AO passed d....
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....f business. 9. Before this Tribunal, assessee has filed a petition for admission of additional evidence that containing the details justifying why the commission agency segment should not be clubbed with other segments since the commission agency segment was an integral part of the distribution activity carried on by assessee. It is submitted that these details could not be collated at the stage of transfer pricing proceedings as these are the transfer pricing orders of the subsequent assessment years. 10. It is the prayer of the Ld.AR that a consistent approach may be adopted based on the above orders. He also plays reliance on assessee's own case for assessment year 2006-07 wherein coordinate bench of this Tribunal by order dated 31/10/2012 has upheld the RPM as the most appropriate method as there is a resale without any value addition to the product there. Whereas for assessment year 2015-16 the Ld. TPO accepted the aggregated approach of transactions using TNMM as the most appropriate method. Similar was the approach accepted for assessment year 2018-19. 11. The Ld. CIT.DR submitted that, the issue may be remanded to the Ld.AO/TPO to verify the details and to consider....
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....ound raised by assessee stands allowed for statistical purposes. 16. Ground No. 4 raised by assessee is against disallowance of customs duty paid for demonstration equipment. 16.1 The Ld.AR submitted that, assessee incurred octroi and customs charges on the import of equipment which was brought to India for purpose of demonstration to the Indian market. The demonstrating equipment was re-exported to the suppliers once the purpose was achieved. The Ld.AR submitted that, on such re-export assessee was entitled to duty drawback scheme. It is submitted that the refund received on account of duty drawback was credited to the P&L account in subsequent years and offer to tax in the return of income for that period. 17. The Ld.AR submitted that assessing officer disallowed the customs duty paid by assessee treating the same as capital in nature. The DRP held that the equipment provided enduring benefit to assessee as there was no legal obligation to return the same. The DRP however held that the amount received as duty drawback become sale price of the equipment and the same should be reduced from the block of assets. He also submitted that the DRP granted assessee to depreciation....
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..... 20.1 The Ld.AR submitted that, during assessment years 2005- 06 and 2008-09 assessee had accrued buying and selling commission of Rs. 17,00,493/- payable to "AA enterprises" was not discharged and there was an ongoing litigation before Hon'ble Karnataka High Court. The Ld.AO made addition considering the amount to be contingent liability. The DRP upheld the action of the Ld.AO by holding it to be prior period expenses which could not have been claimed in the year under consideration. 20.2 It is a submission of the Ld.AR that, there are evidences placed on record in order to consider the claim of assessee which has been ignored by the authorities below. The Ld. CIT.DR submitted that this issue may be remanded to the Ld.AO in the interest of justice. We have perused submissions advanced for both sides in light of records placed before us. The details filed by assessee has not been considered by the Ld.AO and the litigation that is pending in respect of the amount due and payable by assessee which pertains to the preceding assessment years. We direct the Ld.AO to consider the claim of assessee in accordance with law in the light of the evidences filed by assessee. ....