TaxTMI 
TaxTMI 
2025 (3) TMI 2076
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....the business of manufacture and trading of printing inks and allowed products having its presence all over India. The company had obtained corporate membership of clubs having affiliations across India for its Directors, managerial personnel and senior employees to interact with customers and other stakeholders. It was the submission that such club provided a perfect platform for interactions, exchange of information and to conduct business. The Assessing Officer had originally disallowed the expenses u/s. 37(1) and before the DRP the assessee had furnished the invoices and the Hon'ble DRP had set aside the matter to the file of the Assessing Officer to examine the additional evidences. The Assessing Officer examined the invoices and noted that the invoices were issued in the names of different persons and, therefore, held that the expenses were not incurred for the business of the assessee. It was the further submission that the persons mentioned in the invoices were either the Directors or the managerial personnel and the Senior employees of the assessee Company. It was the submission that the Directors, managerial personnel and senior employees had used the services of the c....
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....ent account did not form part of the financial statements and that the allocation keys were not provided. The Ld. AR drew our attention to pages 106 to 107 of the auditor's certificate which reads as follows: 8. It was the submission that this issue was squarely covered by the decision of the Coordinate Bench of this Tribunal in the assessee's own case for the AY 2014-15 reported in 111 taxmann.com 249 wherein the Co-ordinate Bench of this Tribunal had held the issue in favour of the assessee. The findings of the Co-ordinate Bench of this Tribunal are from para 7 which reads as follows: "7. We have heard the rival contentions and gone through the relevant materials as placed before us. We find from the impugned order of the Coordinate Bench in assessee's own case in ITA No. 2558/KOL/2017 for A.Y. 2013-14 that the issue has been decided in favour of the assessee. The operative part of the decision is extracted below :- "18. In view of the above findings, the next issue for our consideration is whether therefore the use of segmented information qua the (a) manufacturing segment and (b) trading segment is permissible in the given facts of the present c....
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....nner and in that view of the matter, we are of the considered view that the lower authorities were unjustified in rejecting the audited segmented results on the frivolous premise that it did not form part of financial statements. 20. We further note that the disclosure of segment information in annual financial statements of an enterprise are governed by the Accounting Standard (AS) -17 (Segment Reporting) issued by the Institute of Chartered Accountants of India (ICAI). The aforesaid accounting standard is applicable to an enterprise subject to certain conditions specified therein. The disclosure of segment information is mandatory for an enterprise, the enterprise discloses requisite information in respect of identifiable segments either product wise or geographical wise. The relevant definitions of the two types of segments in AS-17 read as follows: "A BUSINESS SEGMENT is a distinguishable component of an enterprise that is engaged in providing an individual product or service or a group of related products or services and that is subject to risks and returns that are different from those of other business segments. A GEOGRAPHICAL SEGMENT is a distingu....
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.... company are heterogeneous and in order to rely upon the financials of such segments for the TP analysis, it is always better to have the same duly audited. He has contended that although there is no legal M/s. Syniverse Mobile Solutions Private Limited, Hyderabad requirement to get the segmental financials audited, it is always preferable for establishing the reliability." (ii) Brigade Global Service Pvt. Ltd. Vs ITO, Hyderabad [143 ITD 59], wherein it was observed as follows: "The AR submitted that, in respect of F.I. Sofex (item No. 11 in the chart) introduced by the assessee but rejected by Learned CIT (Appeals) as well as TPO on the ground that nosegmental details were available. Whereas the fact remains that the assessee had furnished the segmental data. The Mumbai Tribunal in the case of Addl. CIT v. Technimont ICB India (P) Ltd. 148 TTJ (Mumbai) (TM) 547 had held that where the segmental data was furnished rejection of such cases as comparable is not justified. It was further held by both the lower authorities that bad debts written off cannot be allowed as operating cost. The Assessee respectfully submits that bad debts written off forms part of operating....
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....evant financial year. However, it is pertinent to note that the assessee company submitted segment reporting to the Ld TPO solely for the purpose of application of the TNMM. We note that Coordinate Bench Delhi Tribunal in the matter of GSR Technology (India) (P.) Ltd vs. AGIT reported in [2018] 90 taxmann.com 85 (Delhi - Trib.), has examined the issue as to whether the TPO/DRP erred in disregarding the segmental information provided by the taxpayer for the reason that the same was not an audited one. ln this connection, the Coordinate Bench on the decision of the Coordinate Bench Chennai in the matter of Honeywell Electrical Devices & Systems India Ltd. v. Asstt. CIT reported in [2014] 42 taxmann.com 223/64 SOT 118 (Chennai - Trib.) wherein the Chennai Tribunal, placing reliance on the decision rendered in the matter of 3iInfotec Ltd. v. ITO reported in [2013] 35 txmann.com 582 (Chennai - Trib), held that even if such segmental results were not shown in the audited financial accounts, they had to be accepted. The Coordinate Bench in the matter of Infotec Ltd. v. ITO (supra) held that there was no legal requirement that the segment wise working submitted before the TPO should have b....
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....part of the financial statement. It was the submission that the same cannot be relied upon. 10. We have considered the rival submissions. A perusal of the facts of the present case clearly shows that the issue of the bench mark by applying the Transactional (TNMM) method using segmental method is now squarely covered by the decision of the Co-ordinate Bench of the Tribunal in the assessee's own case in ITA No. 2084/Kol/2018 for AY 2014-15 and ITA No. 2558/Kol/2017 for AY 2013-14. Under these circumstances, respectfully following the decision of the Co-ordinate Bench of this Tribunal in assessee's own case, this issue is held in favour of the assessee 11. The next issue in respect of the transfer pricing adjustment is in regard to the selection of comparable. It was the submission that the assessee had selected Organic Coatings Ltd., Yasefu Inks & Coatings Pvt. Ltd., Bombay Wellprint Inks Pvt. Ltd. and Dolphin Inks Pvt. Ltd. The same were also accepted by the TPO. However, the TPO further went on to add four other comparable being Rex-Tone Industries Ltd., Sudarshan Chemicals Industries Ltd., Hi-shine Inks Ltd. and Siegwork India Pvt. Ltd. Before the DRP, the assessee ....
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..... as all of them were in the manufacture of items which are not comparable to that of the assessee. 12. In reply, the ld. CIT, DR vehemently supported the order of the TPO. 13. We have heard the rival contentions. Ink has got various uses. A perusal of the facts clearly show that the assessee manufactures inks which are used for printing in newspapers, off set printing, packaging material, labels etc. When comparing with these, Rex-Tone Industries Ltd. are primarily engaged into manufacturing of printer cartridge ink. In respect of Hi-Shine Inks Pvt. Ltd., they manufacture ball pen ink and gel pen ink. Siegework India Pvt. Ltd. manufactures ink used in printing of food, edible or edible products and cosmetics. Obviously, none of the comparables which have been taken by the TPO and accepted by the DRP being Rex-Tone Industries Ltd., Hi-Shine Inks Pvt. Ltd., or Siegework India Pvt. Ltd. manufacture products which are similar to that of the assessee. Just because the comparable adopted also manufacture ink it cannot be said that the said three companies are comparable in respect of the manufacturing process. A perusal of the DRP's order clearly shows that the DRP has accepte....
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....count of the Company and exhibit true and fair view of the Company's affairs; and (c) Cost accounting records have been properly kept so as to give a true and fair view of the cost of production of the products of the Company. In our opinion, the Schedule referred to above presents fairly, in all material respects of operations of DIC India Limited for the year ended March 31, 2020, in conformity with cost accounting principles generally accepted in India. For M Karia & Co Chartered Accountants FRN: 331840E Mehul Karia Mehul Karia (Proprietor) Membership No: 301729 UDIN: 23301729BGXMMN7465 Place: Kolkata Date: 11-01-2023 Document 2 DIC luẩn Linind Segment - FY 1920 Futiles Manufacturing Traing Todl Doerk Expert Toul of Manufacturing Rdund Party Thethury Total of Trading Sale te 3rd Party Salt to Related Perty Sam LALUJO HATTE 20.54.32,501 11000 MAASLES 14. JA.04. 81 -SAUS 1.62.01.72.54 Oder ise Sales of Containers 94.58 308 6.72.560 1 00 136 LALE AI 4.35,639 244,336 471955 LILILS Comesosion Income . . . + 12.31.979 M 1432 WWW 50.50.397 Day Drastuk 46 46 582 1208 729 1.943 . . . 71.54.39 M 25 komw REITEN 20.06.047 HUH - + . KUS Ins....