TaxTMI 
TaxTMI 
2023 (5) TMI 1504
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....d that, the assessee had entered into international transaction with its associated enterprises in Spain that exceeded Rs. 15 crores. A reference was therefore made to the transfer pricing officer to determine the arms length price of the international transaction. 2.2 On receipt of the reference, the Ld. TPO called upon assessee to file the economic details of international transaction in form 3CEB. The Ld. TPO noted that assessee had following international transactions with associated enterprises. International Transactions Particulars Receivables/ Received Payables/ Paid Method Purchase of raw material 73,95,93,611 TNMM Purchase of fixed assets 22,12,00,779 TNMM Payment of royalty 3,03,90,210 CUP External commercial borrowing 55,00,00.000 CUP Interest on external commercial borrowing 3,09,57,056 CUP Issue of equity shares (CHARGED) 11,24,99,980 Other method Securities premium on issue of equity shares (charged) 11,24,99,980 Other method Total 77,49,99,960 1,02,21,41,656 1,79,71,41,616 2.3 The L....
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..... At the outset, the Ld.AR submitted that assessee has filed an application seeking admission of additional grounds on 08.01.2023 which are as under: 5.1 It has been submitted that no new facts needs to be considered in order to dispose of the additional grounds raised by the assessee. It is submitted that, the additional grounds raised do not require verification of any new facts. The Ld. AR, thus prayed for the admission of additional grounds so raised by assessee. 5.2 On the contrary, the Ld. CIT. DR though opposed admission of the additional ground, could not bring anything on record which would challenge such a right available to assessee under the Act. We have perused the submissions advanced by both sides in light of records placed before us. 5.3 We note that the additional grounds are directly connected with the main issue of disallowance and no new facts needs to be investigated for adjudicating the same. Another issues alleged by the assessee is a legal issue that does not require investigation of any facts. 5.4 Considering the submissions and respectfully following the decisions of Hon'ble Supreme Court in case of National Thermal Power Co. Ltd. Vs. CIT r....
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....ate success or failure of the activities. 7. The Ld.AR submitted that Ground nos. 1 to 4 are general in nature, and therefore do not require adjudication. 8. The Ld.AR submitted that Ground nos. 5-6 r.w. additional ground nos. 5.1 and 6.1 are in respect of the comparables sought for inclusion / exclusion of comparables. He submitted that in Additional grounds 5.1 and 6.1, many comparables have been raised. The assessee wish to argue only TD Power Systems Ltd. in additional ground no. 5.1 for inclusion and Inox Wind Ltd. and Suzlon Energy Ltd. in additional ground no. 6.1 for exclusion. 8.1 Additional Ground no. 5.1 read with Ground no. 5 TD Power Systems Ltd .:- The Ld.AR submitted that this comparable was excluded by the Ld.TPO by applying persistent loss filter. Before us the Ld.AR submitted that this comparable has earned loss only for Assessment Year 2017-18 and during Assessment Years 2016-17 and 2015-16, it had earned profit. The Ld.AR has filed before us the details of the revenue earned by this company under the manufacturing segment as well as at the entity level in order to substantiate its argument. It is submitted that apart from the observation of the Ld....
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....ation in accordance with law. Needless to say that proper opportunity of being heard must be granted to assessee. 8.2 Additional Ground no. 6.1 r.w. Ground no. 6 a) Inox Wind Ltd .:- The Ld.AR submitted that this comparable is not functionally similar with that of assessee and that there is no segmental reporting in the annual reports that is annexed at page 527 of the paper book. It is submitted that, this company is also into sale of power and has incurred a huge job work charges which establishes that it outsources its work. It is the submission of the Ld.AR that this company has a different business model and therefore cannot be considered to be a good comparable with that of assessee. The Ld.AR also relied on the decision of Hon'ble Delhi High Court in case of Rampgreen Solutions Put. Ltd. vs. CIT reported in (2015) 60 taxmann.com 355 in support of its above contention. The Ld. DR on the contrary relied on the observations of the DRP. We have perused the submissions advanced by both sides in the light of records placed before us. We note that the Ld. TPO has held this comparable to be functionally similar as it is into manufacturing of wind turbine genera....
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....tal details available in respect of the revenue earned by this comparable from the sale of wind turbine generators and therefore deserves to be excluded. On the contrary, the Ld. DR placed reliance on orders passed by authorities below. We have perused the submissions advanced by both sides in the light of records placed before us. The primary reason in our view why this comparable should not be considered is that it is a public limited company. It is thus a company wherein public has got huge stakes. The Ld. TPO did not consider the objections of the assessee by observing that the amalgamation / amalgamation merger was by way of an order passed in the month of May, 2017. But he failed to observe the effective date which is 01.01.2016 and 01.04.2016 which is relevant for the Assessment Year under consideration. Another reason why this comparable should not be excluded in our mind is that there is no segmental details available with respect to the income generated by this company with respect to sale of wind turbines. We therefore direct the Ld.AO/TPO to exclude this comparable from the final list. Accordingly, ground nos. 5-6 and 5.1-6.1 raised by assessee stands partly....
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....alysis for the determination of the ALP. 4. The Hon'ble DRP and the Learned AO / TPO have erred, in law and in facts, in rejecting the comparability analysis conducted by rejecting / modifying quantitative filters applied by the Appellant in its TP Documentation and applying additional / revised filters. 5. The Hon'ble DRP and the Learned AO / TPO has erred in law and in facts, in rejecting comparable companies identified by the Appellant in the Transfer Pricing documentation 6. The Hon'ble DRP and the Learned AO/TPO have erred, in law and in facts, by identifying companies that are not comparable to the Appellant in terms of the functions performed, assets employed, and risks assumed and applying unreasonable comparability criteria for benchmarking the international transaction. 7 The Hon'ble DRP and the Leamed AO / TPO have erred, in law and in facts, in computation of the operating profit of certain companies considered as comparable. B. The Hon'ble DRP and the Leamed AO / TPO have erred, in law and in facts, by rejecting additional comparable companies introduced by the Appellant without any cogent reasons. OFINDIA DLA 7 9. The Hon&....