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2015 (5) TMI 546 - ITAT BANGALORETransfer pricing adjustment - Adjustment to the manufacturing segment - TPO considered the international transactions of Air Solutions Segment consisting of sales of ₹ 84,50,33,854 as part of the infrastructure segment while making the adjustment - Held that:- In the T.P. order passed by the TPO under Section 92CA of the Act dt.28.10.2009, it is seen that there is neither any mention whatsoever about the two segments nor is there any finding whether the TPO accepts or rejects the segmental details furnished by the assessee. However, for the computation of the ALP of international transactions, the TPO has adopted four out of five of the comparables chosen by the assessee in its T.P. Study for its infrastructure group and also adopted the current year margins of these comparables for determining the mean margin of the comparables. From these details as emanate from the record, it is clear that the TPO has made an adjustment only to the Infrastructure Group Segment and has not proposed any T.P. Adjustment for the Air Solutions Segment. That being the case, it is but appropriate that only those transactions pertaining to the infrastructure group segment are considered for making the T.P. Adjustment. In this factual matrix, we hold and direct that the adjustments are to be made only on those transactions pertaining to the Infrastructure Group Segment, as decided by the TPO in his order under Section 92CA of the Act, and that the computation is to be decided accordingly. The segmental details made to be examined in detail to decide how much of it relates to the Infrastructure Group Segment and how much to the Air Solutions Segment. As the TPO has not examined the same and rendered any finding in this regard, we deem it appropriate to remand this issue back to the file of the TPO to examine the matter - Decided in favour of assessee for statistical purposes. Adjustment only on AE transactions - assessee contends that the adjustments are to be made only on AE transactions related to the Infrastructure Segment and not only the entire transactions of the segment - Held that:- The assessee had raised the issue before the TPO in the rectification application dt.2.2.2010, but we find that the TPO has not rendered any specific finding on the same in the order under Section 154 of the Act passed by him on 29.6.2010. Detailed examination is required to ascertain the extent of the transactions that pertain to the AEs on which adjustments have to be made. As the TPO has not examined the same or rendered any finding thereon, we are of the opinion that it would be appropriate to remand the issue back to the file of the TPO to examine and determine the quantum of AE transactions on which the T.P. Adjustment has to be made. We, therefore, restore this matter to the file of the TPO with the direction that the adjustment may be made only on the AE transactions related to the Infrastructure Group Segment . Error in computation of operating margin in Infrastructure Segment - treatment of excise duty while computing the margins - Held that:- Following the afore cited decision of the co-ordinate bench of ITAT, Bangalore in the case of Toyota Kirloskar Motors Ltd. (2013 (1) TMI 86 - ITAT BANGALORE ), we hold and direct that excise duty shall be excluded from sales as well as costs for both the assessee and the comparable companies while computing the margins. Exclusion of Escorts Ltd. as a comparable - Held that:- Since the financial figures adopted for this company were for a different period, the TPO was right in holding that it is not comparable. We, therefore, find no infirmity in the decision of the TPO in rejecting this company as a comparable company. - Decided against assessee. Multiple year data accepted - Held that:- Non-availability of information in the public data base can at best be relevant to explain the discharge of the assessee's obligation of maintaining the prescribed documentation under Section 92D(i) of the Act r.w. Rule 10B of the I.T. Rules, 1962. However, such non-availability will not dispense with the mandatory requirement of Rule 10B(4) for using current financial year data in conducting comparability analysis and in determining the ALP in accordance with section 92C(1) and 92C(2) of the Act. As it is mandatory requirement of law to utilise data of the current financial year to conduct the comparability analysis at the time of transfer pricing proceedings, the TPO is not only empowered but is also duty bound to determine the ALP using such contemporaneous data for this purpose even if such data was not available to the assessee in the public data bases at the time of preparation of its T.P. Study report. Further, we are also of the view that the TPO has rightly rejected the use of earlier year’s data by the assessee, as the assessee failed to establish how such earlier year’s data had an influence on the prices of the current financial year - Decided against assessee. Interest on Receivable - Held that:- Following the decision of Evonik Degussa India P. Ltd. (2013 (1) TMI 60 - ITAT MUMBAI), we hold that the addition on account of notional interest relating to alleged delayed payment in collection of receivables from AEs is not called for. However, as can be seen from the extract of the decision reproduced above, the above decision has been rendered in the factual context that there has been no agreement for charging interest on delayed payment. We, therefore, deem it appropriate to remand this issue back o the file of the Assessing Officer / TPO for examination as to whether there was any agreement for charging interest on late payments or not and if it is found that there was no such agreement, then the T.P. Adjustment made in this regard requires to be deleted - Decided in favour of assessee. Charge of interest u/s.234C - Held that:- The charging of interest is consequential, mandatory and the Assessing Officer has no discretion in the matter. This proposition has been upheld by the Hon'ble Apex Court in the case of Anjum H Ghaswala (2001 (10) TMI 4 - SUPREME Court ) and we, therefore, uphold the action of the Assessing Officer in charging the said interest. The Assessing Officer is, however, directed to recompute the interest chargeable u/s. 234C of the Act, if any, while giving effect to this order. - Decided against assessee.
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