TaxTMI 
TaxTMI 
2025 (10) TMI 839
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.... facts and circumstances of the case, the Ld.AO/DRP have erred in disallowing the claim of the deduction of the Assessee u's 80IA of the Act on the ground that works have been awarded to the Assessee by Joint Venture Companies and that the requirement of Section 80IA of the Act are not fulfilled. Transfer Pricing Grounds 3. That on the facts and circumstances of the case and in law, the Ld. AO/ Ld. TPO has erred in enhancing the income of Assessee by Rs. 1,31,62.27,000 while holding that the Assessee's specified domestic transaction with its associated enterprise ('AE") namely Sushee Arunachal Highways Limited pertaining to Ministry of Road Transport Highways project does not satisfy the arm's length principle envisaged under the Act and in doing so, have grossly erred in : a. not appreciating that more than 90% of the contract receipts during the year are on account of work done in the earlier years and that the costs pertaining to the same have been absorbed in the earlier years. b. in interpreting/applying the provisions of section 92BA read with section 80IA(10) of the Act, without establishing the existence of any arrangement....
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....ons set out in section 92C(3) of the Act are satisfied in the present case. e. disregarding the arm's length price ('ALP") as determined by the Assessee in the Transfer Pricing (TP) documentation maintained in terms of section 92D of the Act read with Rule 100 of the Income-tax Rules, 1962 ('Rules'). f. modifying the comparability analysis in the TP documentation and in conducting a fresh comparability search based on application of additional revised filters in determining ALP. g. including certain companies in the final comparable set that are not comparable to the Assessee in terms of functions performed, assets employed and risks assumed 5. That on the facts and circumstances of the case, the Ld. AO has erred in not granting credit under Section 115JAA of the Act amounting to Rs. 10,93,41,440 6. That on the facts and circumstances of the case, the Ld. AO has erred in considering the TDS at Rs. 9,42,69,564 as against Rs. 10,21,50,744 7. That on the facts and circumstances of the case, the Ld. AO erred in the levy of the interest under Section 234A and 234B of the Act 8. The Appellant craves leave to a....
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.... disallowed the claim on the ground that the assessee has not entered into any agreement with the Government as a mandatory condition u/sec. 80IA(4) of the Income Tax Act, 1961. The learned AR has submitted that this claim of the assessee was considered and allowed by this Tribunal in assessee's own case for the assessment years 2008-2009 to 2014-2015. Therefore, this issue is covered by the earlier decisions of this Tribunal in assessee's own case. 8. The Learned DR for the Revenue, on the other hand submitted that the Revenue has already filed appeals before the Hon'ble High Court against the orders of this Tribunal in earlier assessment years. He has further submitted that the earlier orders passed by the Tribunal pertains to the pre-amended provisions of sec.80IA of the Act. He has further submitted that once the contract between an enterprise and Government for development and maintenance and operation of the infrastructure facilities is a mandatory condition, then, in absence of any contract between the assessee and the Government renders the assessee not eligible for deduction u/sec. 80IA(4) of the Act. In support of his contention, he relied upon the Judgment of Hon'ble ....
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....ec.80IA(4) of the Income Tax Act, 1961 and then, decide this issue in accordance with law. 10. Grounds of appeal Nos.3 and 4 are regarding TP adjustment in respect of the specified domestic transactions. The assessee has reported the specified domestic transactions as given in para-3.2 of the Transfer Pricing Officer [in short "TPO"] Order as under : Name of the AE Nature of Transaction Amount (Rs.) MAM Adopted SUSHEE IVRCL ARUNACHAL HYWAYS LIMITED CONTRACT REVENUE 2558530275 Other Method SUSHEE PRASAD JV CONTRACT REVENUE 403052595 Other Method 11. The assessee has claimed that it's specified domestic transactions are at arm's length on the ground that the related parties were awarded all the contracts from Government, have sub-contracted the projects to the assessee and transferred the revenue received from the Government to the assessee without any mark-up. Therefore, the assessee has claimed that when the related parties have not deducted any amount from the amount received from the Government and transferred the entire amount to the assessee, then, the price of the transactions with the related parties is at arm's length. It was also co....
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.... of ALP & OR) 1270.8 Accordingly, the sum of Rs. 12,70,80,000/- is hereby suggested as adjustment in respect of Specified Domestic Transaction entered with the AE i.e Sushee Prasad JV. 12. The summary of total adjustment made on various specified domestic transactions are as under: S. No. Nature of adjustment Adjustment (Rs.) 1. Specified Domestic Transactions entered with Sushee Arunachal Highways Ltd Rs. 131,62,27,000/- 2. Specified Domestic Transactions entered with Sushee Prasad JV Rs. 12,70,80,000/- Total Rs.144,33,07,000/- 13. Thus, the total TP adjustment on specified domestic transactions is computed at Rs. 144,33,07,000/-. The Assessing Officer is required to rework the deduction u/s 80IA of the taxpayer accordingly." 12. In pursuance to the Order of the TPO, the Assessing Officer passed Draft Assessment Order, whereby made addition of the said amount of Rs. 144,33,07,000/- on account of TP adjustment. 13. The assessee challenged the Draft Assessment Order by filing objections before the DRP, but, could not succeed. 14. Before the Tribunal, the learned AR for the Assessee has reiterated it's conten....
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....reasoning for rejection of the benchmarking done by the assessee which is alien to the procedure for determining the ALP. This is not the jurisdiction of the TPO to scrutinize the claim of deduction u/sec. 80IA of the Act of the assessee in respect of projects undertaken by the assessee under sub-contract from the AE. The very object of the Transfer Pricing proceedings is to determine the ALP and to ensure that the assessee should not shift it's profit to the AE, whereas the TPO has proceeded in the reverse direction to re-calculate the profit of the assessee by disallowing the expenditure on the premise that the assessee has allocated/apportioned more expenditure to the non-eligible projects/enterprise and thereby, showing excess profit/income in respect of 80IA eligible units/enterprises. This is not the jurisdiction of the TPO to question the allocation of the expenditure between eligible and non-eligible units of the assessee. The TPO ought to have examine the price of the transactions with the related party as reported being specified domestic transactions and then, to determine the ALP. Undisputedly, the assessee has received sub-contract receipts from the related parties as ....
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....non-eligible unit. That issue is purely a corporate issue and will not change the price of the specified domestic transactions. Thus, the approach of the TPO is beyond the Transfer Pricing Provisions of the Act. Accordingly, in view of the above facts and circumstances, we hold that rejection of the benchmarking done by assessee under CUP method on the part of the TPO and adopting 'Another Method' by the TPO is highly arbitrary and unjustified. The entire thrust of the TPO to reject the benchmarking of the assessee and adopting 'Another Method' was to re-allocate the cost/expenditure between the 80IA eligible units and non-eligible units and then, re-determined the financial results of each of the unit of the assessee instead of the reported financial results duly audited. Accordingly, the addition made by the Assessing Officer on account of TP adjustment is not sustainable and liable to be deleted. We order accordingly. 17. Grounds of appeal No.5 is regarding the grievance of the assessee that not granting credit u/sec. 115JAA of the Act. 18. This issue is raised by the assessee for the first time and was not raised before the DRP. Therefore, the learned AR of the Assessee s....