TaxTMI 
TaxTMI 
2025 (12) TMI 846
X X X X Extracts X X X X
X X X X Extracts X X X X
....8 - AY 2009-10 (Deptt. Appeal): 2 Grounds of Appeal raised by revenue appellant are as under: 1. Whether on the facts and circumstances of the case, the Ld. CIT(A) is legally justified in deleting disallowances of Rs. 24,75,02,103 u/s. 10B of the Income Tax Act (hereinafter referred to as "the Act") without considering the findings of the Assessing Officer (hereinafter referred to as "the AO") in assessment order that the assessee had failed to maintain separate books of accounts for the respective units alleged to be eligible for deduction u/s. 10B of the Act? 2. Whether on the facts and circumstances of the case, the Ld. CIT(A) is legally justified in deleting disallowances of Rs. 24,75,02,103 u/s. 10B of the Act without any basis from composite accounts of all the undertaking and the eligible profit was highly disproportionate as compared to the total profit earned by the assessee during the year and also by ignoring the fact that the assessee failed to explain the basis of appropriation of profits? 3 Whether on the facts and circumstances of the case, the Ld. CIT(A) is legally justified in directing to exclude M/s Apitco Limited, M/s Cameo Corporat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....while computing ALP for Corporate Support Service Segment. 4.1 We have perused the order of the lower authorities and written synopsis filed by the revenue. Learned CIT(A) in respect of the issue under consideration has held as under: "Ground No. 9 : Corporate support Services: 5.38 The appellant also provides certain back office and centralised corporate services like accounting, legal, IT/network support, MIS, internal audit support etc. in its group companies with the stated aim to enable the AEs to focus on their core operations and therefore function in an efficient manner. The appellant has stated that such services are also provided to its Indian entities. The appellant charges the AEs on the basis of total operating cost plus a markup of 15%. In it's transfer pricing study the appellant had selected TNMM as the most appropriate method and OP/TC as the suitable PLI and claimed that the corporate's support services were at arm's length. 5.39 The TPO did not except the contention of the appellant and carried out his own transfer pricing analysis which has been discussed in detail in the body of the order. The ΛΟ/Τ&Rh....
X X X X Extracts X X X X
X X X X Extracts X X X X
....130/Bang/2014 IT(TP)A No. 271/Bang/2014 in the case of Cisco Systems (India) (P) Ltd. v. Dy. CIT [2014] 66 SOT 82/50 taxmann.com 280 wherein the issue has been discussed at page 59 para 53.27. The ITAT in the facts it was his submission held that the company engaged in the activities of skill development. tourism research, environment etc, was held to be functionally different and thus not comparable to the assessee. The facts of the present assessee and that of Cisco Systems (India) (P) Ltd. case (supra) it was submitted were identical. The assessee was rendering software development services and also handling marketing support service sector"," (c) It is seen that the above-mentioned company is engaged in diverse activities which is not comparable to the corporate support services rendered by the appellant. In view of the same and relying upon the order of the Hon'ble Delhi Tribunal in the case of Adobe Systems Private Ltd (supra), the AO/TPO is directed to exclude Apitco from the final set of comparables. (ii) Cameo Corporate Services Ltd: (a) The main contention of the appellant during the course of appellate proceeding is that the above-mentioned....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nsfer and was therefore not comparable to the assessee. He relied on the decision of the coordinate Bench in the case of Adidas Technical Services (P.) Lad. v. Dy. CIT (ITA No. 862/Del/2016) 21. The learned DR relied on the order of the TPO and referred to the functional profile of the company. It was submitted that the company is engaged in providing business services and is comparable to the assessee. He vehemently submitted that the company should be included in the list of comparables. 22. We have considered the rival submissions and the extracts from the company's Annual Report. In our view, the functional profile of Cameo Corporate Services Ltd. is similar to the profile of TSR Darashaw Ltd. As we have already rejected TSR Darashaw Ltd. from the list of comparables, Cameo Corporate Services Ltd. is also directed to be excluded from the list of comparables. We find support from the decision of the coordinate Bench in the case of Adidas Technology Services (P) Ltd. (supra), wherein on identical facts, the company was excluded by observing as under: "6. In the case of Cameo Corporate Services Ltd. the DRP is of the view that, the functions are comp....
X X X X Extracts X X X X
X X X X Extracts X X X X
....curement Consultants Ltd. A copy of Annual report of this company for the relevant year is available on record. As per this Report, this company is promoted by Export-Import Bank of India in association with leading Indian Public Sector and Private Sector consultancy organisations on the basis of Public-private partnership model that offers collective Indian experience and expertise through the provision of a range of advisory services with particular focus on 'Procurement'. This company provides technical assistance in enhancing quality, transparency, efficiency and effectiveness of procurement and implementation service to help attain desired institutional and corporate objectives. The expertise of this company is available to various sectors including power, water resources, transportation, industries, etc. From the services rendered by this company, as outlined in the Annual report, it can be noticed that it is conducting Independent Procurement Review of multilaterally funded projects spread across the globe. It also undertakes Procurement audits. This company is providing full time advice on procurement and contract related aspects to several agencies across the globe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion lighting and that there is no segmental information available. The appellant has also stated that the above-mentioned company has high/volatile profit margins. It has also been stated that it fails the advertisement and marketing filter as the ratio of expenditure on advertising and marketing to total sales is 3.8%. (b) The advertisement and marketing filter has been applied by the appellant in it's TP study but has been rejected by the TPO. I do not agree with the appellant regarding the application of this filter and I uphold the contention of the TPO given at page 76 of the impugned order at para 7 of the table where he has explained why it is not necessary to use such a filter. (c) The main contention of the TPO for including the above mentioned company is given at page 99 of the impugned order is as follows: - "Taxpayer has argued that the company has not given segmental information and so its results cannot be used. However, it is seen that the company earns commission and service charges for providing agency services. Since, both of them form part of business services, company as a whole is providing business services and therefore there is no requ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....CIT(A) in deleting the addition of Rs. 90,36,787/- on account of disallowance u/s. 14A of the Act made while calculating Book Profit u/s. 115JB of the Act. 5.1 Learned AR of the assessee at the outset pointed out that identical issued has been dealt by Delhi Bench of Tribunal in assessee's own case for Assessment Year 2011-12. It is evident from the said decision that the Bench by referring to the judgment of Hon'ble High Court of Delhi in the case of PCIT vs. Bhushan Steel Ltd. in ITA No. 593/2015 dated 29.09.2015 and Special bench of Delhi Tribunal in the case of ACIT vs. Vireet Investments (P) Ltd. in 167 ITD 27 (Del-Trib.) held that there is no requirement to make any upward adjustment under Section 14A read with Rule 8D while computing 'book profit' as per Explanation 1 to Section 115JB of the Act. In view thereof ground No. 4 raised by the revenue is dismissed. ITA No. 2889/Del/2018 AY 2009-10 (Assessee Appeal): 6 Grounds of Appeal raised by assessee appellant are as under Corporate-Tax 1. That the Commissioner of Income-Tax (Appeals) erred on facts and in law in upholding the disallowance of Rs. 90,36,787/- made by the assessing officer under secti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....minus with that of the assessing officer. The appellant craves to leave add, alter, amend or vary from the above grounds of appeal at or before the time of hearing." Additional Ground "Re: Ground of Appeal No. 1 1.5 "The on facts and circumstances of the case, the disallowance of Rs. 98,20,800 (including suo-moto disallowance) computed/made under section 14A of the Act read with Rule 8D of the Rules is erroneous. 1.6 That on the facts and circumstances of the case, disallowance under section 14A of the Act should be directed to be restricted to Rs. 44,500, being ½% of average investment resulting in earning of dividend income. 1.7 That on the facts and circumstances of the case, the lower authorities erred in not considering only investment actually resulting in exempt income for the purpose of computing disallowance under section 14A of the Act read with rule 8D. Re: Ground of Appeal No. 3 3. "That on facts and circumstances of the case, the disallowance of Rs. 7,84,013 (being suo-moto disallowance) computed/made under section 14A of the Act read with Rule 8D could not have been imported while computing....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d at by the AO having regard to the assessee's accounts and not otherwise. Concededly, there is nothing in the record to suggest that the AO examined the accounts from this perspective. 13.3 Furthermore, in our view, because the appellant/assessee had itself offered an amount which could be disallowed under section 14A of the Act, the onus shifted onto the revenue to ascertain, after examination of the accounts, as to whether or not the appellant's/assessee's claim was correct. It is only after the aforesaid exercise was conducted, could the AO have taken recourse to the prescribed method i.e. rule 8D of the Rules, for determining the expenditure, which, according to him, needed to be disallowed under section 14A of the Act. 13.4 We would assume, for the moment, that the revenue could take recourse to rule 8D of the Rules in both AYs, i.e. 2007-08 and 2008-09, although, as indicated above, it could have been triggered perhaps only in AY 2008-09." 6.3 Thus respectfully following the order of the High Court of Delhi in assessee's own case, in absence of valid satisfaction recorded by the Learned Assessing Officer, we direct the learned Assessing Offic....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s and circumstances of the case, the Ld. CIT(A) is legally justified in deleting disallowances of Rs. 19,60,85,745 u/s. 10B of the Act without any basis from composite accounts of all the undertaking and the eligible profit was highly disproportionate as compared to the total profit earned by the assessee during the year and also by ignoring the fact that the assessee failed to explain the basis of appropriation of profits? 3 Whether on the facts and circumstances of the case, the Ld. CIT(A) is legally justified in directing to exclude M/s Apltco Limited, M/s Cameo Corporate Services Limited, M/s Global Procurement Consultants Limited and M/s Killick Agencies and Marketing Limited & M/s Orient Engineering and Commercial Co. Limited from the final set of comparables even when the entities were functionally comparable to the assessee company? 4 Whether on the facts and circumstances of the case, the Ld. CIT(A) is legally justified in deleting the addition of Rs. 25,87,3357/- on account of disallowance u/s. 14A of the Act made while calculating Book Profit u/s. 115JB of the Act by ignoring the fact that clause (f) of Explanation 1 to section 115JB(2) of the Act, intr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....al) : 12 Grounds of Appeal raised by assessee appellant are as under "Transfer Pricing 1. The Commissioner of Income-Tax (Appeals) erred in enhancing the income of the Appellant in relation to the corporate support service segment by holding that the said international transactions do not satisfy the arm's length principle envisaged under the Act and in doing so have grossly erred in: 1.1 not appreciating that none of the condition set out in section 92C(3) of the Act are satisfied in the present case: 1.2 disregarding the Arm's Length Price ('ALP') as determined by the Appellant in the TP documentation maintained by it in terms of section 92D of the Act read with Rule 10D of Rules as well as fresh search; and in particular modifying/rejecting the filters applied by the Appellant; 1.3 disregarding multiple year/prior years data as used by the Appellant in the TP documentation and holding that current year (i.e. FY 2009-10) data for comparable companies should be used despite the fact that the same was not necessarily available to the Appellant at the time of preparing its TP documentation; 1.4 rejecting comparability analysis....
X X X X Extracts X X X X
X X X X Extracts X X X X
....orporate-Tax 3. That the Commissioner of Income-Tax (Appeals) erred on facts and in law in upholding the disallowance of Rs. 25,87,335/- made by the assessing officer under section 14A of the Act r.w.s. Rule 8D of Income Tax Rules, 1962 ("the Rules") after reducing the suo moto disallowance of Rs. 6,90,736/- made by the appellant, without appreciating that conditions precedent for applying the said Rules as prescribed in sub sections (2)/(3) of the said section were not satisfied. 3.1 That the Commissioner of Income-Tax (Appeals) erred on facts and in law in upholding disallowance of interest expenditure to the tune of Rs.70,733/- without appreciating that no fresh investment, yielding exempt income, was made during the year and the opening investments were made out of interest free/surplus funds available with the appellant. 3.2 That the Commissioner of Income-Tax (Appeals) erred on facts and in law in disallowing administrative expenses to the tune of Rs.32,07,338/-, without appreciating that the suo moto disallowance, amounting to Rs. 6,90,736/- made by the appellant was reasonable. 3.3 Without prejudice to the above, the Commissioner of Incom....