Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2020 (12) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2020 (12) TMI 583 - ITAT DELHITP Adjustment - adjustment on account of AMP - TPO made adjustment on account of AMP to the IT Segment (Contract Software Segment) using the intensity based a project wherein the Selling, General and Administrative (SG&A)/sales ratio of each comparable was compared with that of the assessee - HELD THAT:- As decided in own case [2020 (9) TMI 319 - ITAT DELHI] merely by applying the BLT method which has no legal existence and merely on the basis of MDF agreement vide which taxpayer has received part reimbursement of the AMP expenses incurred by it duly disclosed this expenditure in Form 3CEB and in TP study, so called excessive AMP expenditure of the taxpayer cannot be treated as international transactions u/s 92B of the Act. So, we cannot infer the existence of international transactions qua AMP expenses between taxpayer and AE beyond the reimbursement already made by the AE under MDF Agreement. Comparable selection - HELD THAT:- OTS ESolutions Pvt. Ltd. was held as not comparable in subsequent assessment year i.e. A.Y. 2014-15 [2020 (9) TMI 319 - ITAT DELHI] by the Tribunal. The functional dissimilarity is apparent on record and there are no changes in the present assessment year. Hence, we direct the TPO to exclude this comparable from the final list of comparables. Celkon Impex Pvt. Ltd company is in designing and manufacturing of mobile phones while the assessee company is in trading of consumer electronics, home appliances, computers and IT peripherals which is different portfolio all together. From the perusal of the records it can be seen that Celkon Impex Pvt. Ltd. was held as not comparable in subsequent assessment year i.e. A.Y. 2014- 15 by the DRP. The functional dissimilarity is apparent on record and there are no change in the present assessment year. Hence, we direct the TPO to exclude this comparable from the final list of comparables. Micromax Informatics Limited ompany is also functionally dissimilar to the assessee company. The company undertakes all business activities and undertakes all associated business risks. The company outsources manufacturing activities to third party contractors and sells the products under its own brand name as an entrepreneur. The DRP in subsequent year i.e. 2014-15 has excluded Micromax Informatics Limited from the comparable list. The functional dissimilarity is apparent on record and there are no change in the present assessment year. Hence, we direct the TPO to exclude this comparable from the final list of comparables. United Telelinks (Bangalore) Pvt. Ltd is also functionally dissimilar to the assessee company. It has brand owning and outsources manufacturing activities to third party contractor. Redington India Limited company is engaged in distribution of IT products such as computers, printers, software storage systems and also a leading supply chain solutions provider for global brands of IT hardware and software product which appears to be similar to that of assessee’s functions. Therefore, we direct the TPO to look into the portfolio of this company and applying the filters, this comparable may be included in the final comparable list. Tech Pacific (India) Limited (later name changed to 'Ingram Micro’) engaged it is trading in IT hardware and software products which appears to be similar to that of assessee’s functions. Therefore, we direct the TPO to look into the portfolio of this company and applying the filters, this comparable i.e. Tech Pacific (India) Limited (later name changed to 'Ingram Micro’) may be included in the final comparable list. HCL Infosystems Limited company is engaged in distribution of telecommunication and digital lifestyle products such as cellular phones, computers, printers, scanners etc. and hence functionally similar to the assessee company. Besides this fact, this company is allowed as comparable in A.Y. 2005-06 to 2011-12 by the Tribunal and there are no different facts emerging as relates to function conducted by the present assessment year to that of previous assessment years. Therefore, we direct the TPO to look into the portfolio of this company and applying the filters, this comparable may be included in the final comparable list. Incorrect margin adjusted for working capital of computation of comparables - HELD THAT:- From the perusal of records, it appears that the margin adjusted for working capital of computation of comparables is incorrect and the same fact was not denied by the Ld. DR during the course of hearing. Therefore, we remand back this issue to the file of the TPO with the direction to compute the margin adjusted for working capital of computation of comparables correctly. Needless to say, the assessee be given opportunity of hearing by following principles of natural justice Incorrect computation of proportionate adjustment by TPO for Trading Segment - HELD THAT:- Computation of Proportionate adjustment by TPO for Trading Segment is not in consonance with the computation provided by the assessee and the same needs verification. Hence, this issue is remanded back to the file of the TPO for proper verification as per the directions of the DRP. Needless to say, the assessee be given opportunity of hearing by following principles of natural justice.
|