TaxTMI 
TaxTMI 
TaxTMI 
2019 (1) TMI 2080
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.... copy of the reference letter and other related documents sought by Your Appellants. (2) Manning, Consultancy Fee, Training Fee, Training Expenses, Course Administration cost and Sale of Uniform -Arms Length Price Adjustment - Rs.1,53,50,563/-: (i) The CITA has erred in law and on facts in upholding the Arm Length Price adjustment of Rs. 1,53,50,563/- made by the TPO /AO. (ii) The CITA has erred in law and on facts in upholding the rejection, by the TPO, of Your Appellants' TP Benchmarking Study Report, without any valid reasons. (iii) The CIT(A) has erred in law and on facts in upholding the action of the TPO of finding fault with your Appellants method of allocation of general overheads, when the TPO never asked to furnish any further evidence in spite of informing him of the methodology of how the expenses were allocated, vide your Appellants letter dated August 08, 2011. (iv) The CITA has erred in law and on facts in upholding the action of the TPO in applying the "TNMM method at entity level" (3) Advances Written Off - Rs.2,78,992/-: (i) The learned CITA has erred in law and on facts in upholding the AO's decis....
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.... In the course of the proceedings it was observed by the TPO that the assessee had adopted the following methods for benchmarking the various types of international transactions in its TP study report: - 1. Manning Services TNMM 2. Health Safety Environment and Quality Services TNMM 3. Sourcing Services TNMM However, it was submitted by the assessee before the TPO that it had adopted the following methods for benchmarking the various types of transactions: 1. Manning CPM 2. Management TNMM 3. Training CUP 4. Consultancy Fee CPM 5. BPS Consultancy CPM 6. ECB Loan CUP In the course of the proceedings, it was stated by the assessee before the TPO that in contrast to the earlier years, it had during the year under consideration changed the method for benchmarking from TNMM to CPM. It was observed by the TPO that the assessee had failed to explain as to why the method adopted by it in the TP study report was not accepted by it. It was noticed by the TPO that the assessee had in the TP study report stated that unlike as in the case of trading and manufacturing activities, in case of services the ....
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....251.51/14) 17.97% After removing S. No.4* 19.75% Out of the comparables selected by the assessee the comparable at S. No. 4 i. e Transworks Information Services Ltd. (now known as the Aditya Birla Minacs worldwide Ltd.) not found to be functionally comparable, was thus rejected. In the backdrop of the aforesaid deliberations the TPO adopted the arithmetic mean of the profit level indicator of comparables @ 19.75% and calculated the ALP of the services rendered by the assessee, as under: Total Cost Rs. 14,84,48,232/- Arms Length. Mean Margin 19.75% of the Operating Cost. Arms Length Price (ALP) @ 1 19.75% of Operating Cost Rs.17,77,66,758/- Arms Length Price of Service rendered Rs.17,77,66,758/- Total Income Rs.16,27,36,195/- Shortfall being adjustment u/s 92CA Rs. 1,50,30,563/- On the basis of the aforesaid calculations it was observed by the TPO that the variation between the income returned by the assessee and the ALP did not fall within the safe harbour range of +/- 5%. Accordingly, the TPO suggested an adjustment of Rs.1,50,30,563/- at the entity level, which covered the manning, consultancy fee, training fee, trainin....
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.... is only in respect of the international transactions of the assessee and not the transactions entered into by the assessee with independent unrelated parties. In order to fortify his contention that the TPO while determining the ALP had carried out the TP adjustments not only in respect of the AE transactions but for the entire turnover of the assessee company, therein drew our attention to Page 9 of the order passed by the TPO under Sec.92CA(3) of the I.T. Act. The ld. A.R in order to drive home his contention that for determining ALP of the international transactions the benchmarking has to be done only in respect of the AE transactions and not for entire turnover, therein relied on the following judicial pronouncements : (i) Hindustan Unilever Ltd. Vs. Addl. CIT, Range-1(1), Mumbai. (2012), 28 Taxman.com 142 (Mum). (ii) CIT-1, Mumbai Vs. Hindustan Unilever Ltd. (2017) 394 ITR 73 (Bom). (iii) The CIT-1, Mumbai Vs. Alstom Projects India Ltd. (ITA No. 362 of 2014; dated 14.09.2016) (Bom). (iv) The CIT-8, Mumbai Vs. Phoenix Mecanno (India) Pvt. Ltd., Mumbai (ITA No. 1182 of 2014; dated 07.06.2017)) (Bom). (v) The CIT-8 Vs. Petr....
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....vities. Insofar, the disallowance of the claim of deduction of an amount of Rs.2,78,992/- that was claimed by the assessee as advances "written off" under Sec.36(1)(vi) r.w.s. 36(2) of the I.T. Act was concerned, it was submitted by the ld. D.R that as the assessee could not prove that the amounts under consideration were earlier offered for tax, therefore, the A.O had rightly declined to allow the said claim of deduction so raised by the assessee. 10. The ld. A.R rebutting the aforesaid contentions of the revenue submitted that the allocation of the costs was carried out by the assessee in respect of its various activities on a scientific basis. Insofar, the allocation of salary expense was concerned, it was submitted by the ld. A.R that the same was carried out on the basis of the number of staff members employed in the respective activities. Apart therefrom, it was submitted by him that the assessee had allocated electricity, depreciation and repairs on the basis of the area occupied by each activity. The ld. A.R in order to buttress his claim that the allocation of costs had been carried out on a scientific basis, therein placed on record a certificate of a Chartered Account....
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....transactions was already concluded against the revenue and in favour of the assessee by the earlier decisions of the court in the case of (i) CIT Vs. Tara Jewellers Pvt. Ltd. [ITA No. 1814 of 2013, dated 05.10.2015]; (ii) CIT Vs. Petro Araldite (P) Ltd.] [ITA No.1804 of 2013; dated 24.11.2015]; (iii) CIT Vs. Thyssen Crupp Industries (P) Ltd. [ITA No.2201 of 2013; dated 02.12.2015]; and (iv) CIT Vs. Summit Diamond (India) P. Ltd. [ITA No.1647 of 2013; dated 11.07.2016]. We find that the Hon'ble High Court taking cognizance of the fact that the issue under consideration was already concluded by its earlier orders, held that no substantial question of law did arise from the order of the Tribunal in context of the issue under consideration. 12. We have given a thoughtful consideration and are of the considered view that as the issue that the ALP determined by the assessee has to be seen only with regard to its international transactions with its AE's and not in respect of its entire turnover/sales is squarely covered by the aforementioned judgments of the Hon'ble High Court of Bombay, therefore, respectfully following the same we restore the matter to the file of the TPO with a dire....
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....was "written off" as irrecoverable under Sec.36(1)(vi) r.w.s. 36(2) of the I.T. Act. We find from a perusal of the orders of the lower authorities that the aforesaid claim of deduction of the assessee was rejected on the ground that the respective amounts under consideration were not earlier offered as income by the assessee. However, the ld. A.R in the course of hearing of the appeal had rebutted the aforesaid observations of the A.O and had stated that the amounts were duly offered as the income of the assessee in the preceding years and having been rendered as irrecoverable during the year were "written off" as irrecoverable in the books of accounts. As observed by us hereinabove, the ld. A.R in order to fortify his aforesaid contention had also placed on record details of certain advances aggregating to Rs.1,32,645/- which are stated to have been earlier offered as income by the assessee in F.Y. 2005-06 & F.Y. 2006-07. 14. We have given a thoughtful consideration to the issue before us and are persuaded to subscribe to the contention of the ld. A.R that after 01.04.1989 for claim of deduction of "bad debts" under Sec.36(1)(vi) r.w.s. 36(2) of the I.T. Act, it is not necessar....