TaxTMI 
TaxTMI 
2023 (5) TMI 1501
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.... of the Act Levying income tax including interest under Section 234B of the Act and raising a net demand payable of Rs. 18,09,08,820 upon the Appellant. II. Transfer Pricing Grounds- Adjustment in relation to export of tractors and parts to its AES, amounting to Rs. 34,33,55,268; 2. On the facts and in the circumstances of the case and in law, the Ld. TPO/AO erred, and Hon'ble DRP further erred in confirming the action of the Ld. TPO/ AO in making the addition Rs. 34,33,55,268 under Section 92CA(3) of the Act to the international transaction of 'Export of tractors and parts'. 3. Erroneous rejection and selection of comparable companies 3.1 On facts and in the circumstances of the case and in law, the Ld. TPO/AO, and the Hon'ble DRP further erred in rejecting 'Action Construction Equipment Limited' selected by the Appellant in the TP documentation, and in doing so, further erred in: -violating the provisions of Rule 10B(2) of the Rules by rejecting Action Construction Equipment Limited without considering its functional comparability -not appreciating the fact that Action Construction Equipment Limited' was ac....
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....-operating and whereas there is no change in facts of the Appellant as compared to AY 2009-10, wherein the Hon. ITAT in Appellant's own case had accepted foreign exchange gain as operating in nature. 5.2 On the facts, and in the circumstances of the case, the Ld. TPO erred in not providing an opportunity of being heard (no show-cause notice was issued) in respect of treating foreign exchange gain as non-operating in nature, thereby, violating the principles of natural justice III. Corporate Tax Grounds 6. Disallowance of Rs. 2,28,85,300 under section 14A of the Act 6.1 On the facts and in the circumstances of the case and in law, the Ld. AO has erred in disallowing Rs. 2,28,85.300 under section 14A of the Act r.w Rule SD of the Income Tax Rules, 1962 ("the Rules') even though the Appellant has not earned/accrued any exempt income during the year under appeal. 6.2 The Ld. AO has failed to appreciate the fact that the Appellant has not earned any tax-exempt income and not incurred any expenditure in relation to earning tax exempt income and hence, no disallowance is warranted under section 14A of the Act. 6.3 On the facts ....
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....ther grounds of appeal preferred by the Appellant. The Appellant prays that directions be given to grant all such relief arising from the above and also all relief consequential thereto. The appellant craves leave to add, alter, amend or withdraw all or any of the Grounds of appeal herein and to submit such statements, documents and papers as may be considered necessary either at or before the appeal hearing. 3. Brief facts of the case are that the assessee is engaged in the business of manufacturing and trading of Agricultural Equipments and Components. The assessee is a subsidiary of Fiat Group Italy and operating in India mainly for the business of Manufacturing of tractors, its spare parts and allied agriculture farm equipment. The Tractors are sold to associate enterprise as well as to third party also in India. 4. Assessee filed its return of income declaring total income of Rs. 1,919,680,300/-. The case of the assessee was selected for scrutiny. As assessee has entered into international transactions of export of tractors to its various associated enterprises, import of raw materials, import of capital goods, payment of royalty and provision of IT ....
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....poration India limited which is a turnover of 92.33 crores and Swaraj automotive limited which the turnover of hundred and 16.41 crores are rejected applying 10 times more or less turnover filter. He also included (i) Preet Tractors Limited, (2) Indo farm Equipment Limited, (iii) Tafe Motors & Tractors Limited as those were also included in the last years TP study report. Thereafter, from the set of six comparables companies having an author metric mean margin of 11.21% was found. The margin of the assessee was also tinkered by removing foreign exchange gain and re-computed at 8.03%. Accordingly he proposed adjustment of Rs. 34,33,55,268/- by order u/s 92 CA (3) of the Act dated 23.07.2021 on account of export of tractors. 10. During the year, assessee has made investment in shares, therefore, show cause notice was issued for disallowance of u/s 14A of the Act, and subsequently, the disallowance of Rs 2, 28, 85, 300/- u/s 14A of the Act was made. 11. Assessee has claimed deduction u/s 35(2B) of the Act of Rs 68,30,71,732/-. The assessee was asked for submitting form no 3CM and 3CL. assessee did not submit form of 3CL, and therefore, the AO disallowed Rs 24,51,98,731/- out of ....
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.... act read with rule 8D can be made. Further amendment made by The Finance Act, 2022 to section 14A with effect from 01.04.2022 does not have retrospective effect as held by Hon'ble Delhi High Court in PCIT vs Era Infrastructure Ltd 141 taxmann.com 288. Therefore, no disallowance under section 14 A of the act can be made in the case of the assessee for the impugned assessment year. Accordingly, ground number 6 of the appeal of the assessee is allowed and the learned assessing officer is directed to delete the disallowance under section 14 A of the act. Ground no 6 is allowed. 20. Coming to the ground no 2, 3 and 4 with respect to transfer pricing adjustment. The assessee has selected following companies (101 page no of paper book) 6.1.7 Final Set of comparable Companies. The search steps incorporated above resulted in the identification of a final set of 8 independent comparable companies, their NCP are presented below. Sr. No Company Name NCP % 2016 NCP % 2017 NCP % 2018 Weighted Average 1. Action Construction Equipment Ltd. -1.17% 0.16% 1.33% 0.10% 2. Swaraj Automotive Ltd. 2.16% 2.43% 3.83% 2.....
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....arability analysis minimum six comparable companies should be available as per CBDT notification no. 83/2015 dated 19.10.2015 also prescribed that minimum of six comparables would be required in data set for applicability of the range. It is the fact that if the companies with smaller turnover or vary large turnover are not comparable. Application of turnover filter of 1/10 has been up held by the Hon'ble Mumbai High court in case of Pentair Water India Ltd. as well as Hon'ble Delhi High Court in Agnity India Technologies Pvt. Ltd. purpose of applying the turnover filter is to have comparables having similar size. It definitely results into making more appropriate comparability analysis. Further, the only reason of the contention of the assessee to not to apply the turnover filter of one by ten turnover is for exclusion of Standard corporation India Pvt. Ltd. and Swaraj Automotive Ltd. comparable selected by the assessee which got excluded on application of above filter, we find that the turnover filter of 10 times more or less of assessee's turnover has been correctly applied by the learned TPO and also upheld by the learned dispute resolution panel. Therefore We do not find a....