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2017 (12) TMI 1867 - ITAT HYDERABADTP Adjustment - determination of the Arms’ Length Price to the TPO u/s 92CA - considering only operating profit and operating cost relating to the AE transactions - MAM - DRP rejected the assessee’s contention of internal TNMM because the assessee did not submit the segmental results before the TPO or DRP - Whether TPO had erred in arriving at ALP by applying the Profit Level Indicator (PLI) on the total cost which includes cost attributable to non AEs also and the total receipts from both AEs and non-AEs? - HELD THAT:- We find that where the assessee has both the AE as well as non-AE transactions, the operating profit and operating cost relating to the AE transactions alone ought to be considered for arriving at the ALP and thereafter the fixed cost attributable to both the transactions ought to be apportioned. When the TPO has adopted the TNMM as the most appropriate method and the assessee has rendered similar services to both the AEs and non- AEs, and the non-AE transaction satisfy the internal TNMM. The AO, therefore, ought to have considered them for arriving at the ALP. Therefore, we deem it fit and proper to remit this issue to the file of the AO with a direction to consider only the operating profit/operating cost of AE transactions and also to consider internal TNMM where the services rendered by the assessee are similar both to AEs and non-AEs. Accordingly, grounds of appeal Nos.3 to 3.4 are treated as allowed for statistical purposes. Denial of deduction u/s 10A on the ground that Form No.56F was not filed along with the return of income - HELD THAT:- It is seen from the assessment order, that the assessee has filed e-return and there is no possibility of filing Form No.56F along with the e-return of income. It is also seen that the assessee has filed Form No.56F during the assessment proceedings and before completion of the assessment. As in the case of American Data Solutions India (P) Ltd [2014 (2) TMI 128 - KARNATAKA HIGH COURT] has held that the appellate proceedings are the continuation of the assessment proceedings and if Form No.56F is filed during the course of appellate proceedings, the same should be considered, as the requirement to file the Form 56F along with the return of income is only directory and not mandatory.AO is directed to consider Form No.56F and allow deduction u/s 10A of the Act, provided the assessee, otherwise fulfills all the other conditions prescribed u/s 10A of the Act. Thus, ground of appeal No.4 is treated as allowed for statistical purposes. Bad debts claim - amount is outstanding from “Collins & Aikman Litigation Trust Distribution Account” as on 31.03.2004 and since the said company has become bankrupt during the year, the assessee has written it off as bad debt - HELD THAT:- As it is the case of the assessee that the assessee has offered it as income in the relevant A.Y. in which it has received the amount - Subject to verification of this fact by the AO, i.e. whether the assessee has offered this income to tax in the relevant A.Y, i.e. 2013-14, this issue is decided in favour of the assessee. If the assessee has offered this income to tax in the relevant A.Y, the claim of the assessee for the A.Y 2009-10 shall be allowed, as it is not disputed that Collins & Aikman Corporation has become bankrupt during the relevant financial year. As regards the amount receivable from SCSL and written off by the assessee, the assessee has not been able to produce any evidence in support of the same either before the authorities below or before us. Therefore, this addition is confirmed. Thus, ground of appeal No.5 is partly allowed.
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