2015 (9) TMI 801 - ITAT DELHI

Transfer pricing adjustment - selection of comparable - Held that:- British Metal Corpn. Indian Pvt. Ltd. company is engaged in providing agency services in non-ferrous metals, fertilizers and cooking coal etc. In our considered opinion, the nature of services rendered by this company is entirely different and cannot be considered as a comparable. Moreover, the appellant received fixed fee from its AE. Therefore, we direct that this company be omitted from the list of comparables for the period under consideration for the purpose of determining arm’s length price of the international transaction in question.

Priya International company is engaged in the provision of commissioning agency and trading of chemicals. This function is totally different from marketing services for the equipment of minerals and therefore, this company should be excluded for the purposes of comparison while determine the arm’s length price of the international transaction in question.

PL Worldways Ltd. company earns commission from air ticket sold and also transactional fees from its customer for sale of holiday packages. This function is totally different from the functions carried out by the appellant and therefore, this company should be excluded for the purposes of comparison while determine the arm’s length price of the international transaction in question.

Publicity Society of India Ltd. company engaged in the business of publication of news papers and publications should be excluded for the purposes of comparison while determine the arm’s length price of the international transaction in question.

Addition under Section 40A(2)(a) - disallowance of 50% of profession paid to M/s Metso Minerals (Mumbai) Pvt. Ltd. - Held that:- Assessing Officer is required to record a finding as to whether the expenditure is excessive or unreasonable in relation to any one of the three requirements prescribed. This opinion has to be formed by the Assessing Officer based on the material evidence available on the record. The Assessing Officer is duty bound to bring on record the comparable fair market value of the services rendered to say that the value paid by the assessee is excessive or unreasonable. We find no evidence on record to notice that the Assessing Officer made efforts in this direction. He simply made disallowance based on the surmises and conjectures. See Commissioner of Income-Tax, West Bengal Versus Edward Keventer Private Limited. [1971 (6) TMI 7 - CALCUTTA High Court] affirmed by SC [1978 (8) TMI 1 - SUPREME Court] - Thus 50% of professional charges paid to M/s Metso Minerals (Mumbai) Private Limited cannot be disallowed - Decided in favour of assessee.

Disallowance of unexplained expenditure made against credit card bills - Held that:- The assessing officer while passing the final order did not followed the direction of the DRP and did not re-verified the AIR of the Citi Bank and upheld the adjustment by holding that there was paucity of time so as to verify the AIR of Citi Bank. We are of the considered opinion that the interest of justice would be met, if the matter is restored to the file of the Assessing Officer for fresh adjudication in accordance with law. Accordingly, this ground of appeal is restored to the file of the Assessing Officer.- Decided in favour of assessee for statistical purposes.

Comparable Killick Agencies Marketing Ltd. and Cox and Kings (India) Ltd. deleted by DRP - Held that:- Since the comparables in the question are having more than 15% related party transactions, we hold that the Hon’ble DRP is justified in rejecting these two comparables. Hence the grounds of appeals filed by the Revenue are dismissed.