9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (11) TMI 1147 - AT - Income TaxTP Adjustment - custom duty adjustment - HELD THAT - By giving effect to the order of the ITAT the TPO had examined and allowed custom duty adjustment. Thus, respectfully following the above decision of the Coordinate Benches of the Tribunal, for the assessment year under consideration also, we direct the Assessing Officer to give suitable adjustment against the custom duty component while determining the ALP. Working capital adjustment - Tribunal has considered similar issue in the assessment year 2011-12 2017 (1) TMI 1690 - ITAT CHENNAI wherein held , there is necessity for working capital adjustment - thus we direct the Assessing Officer to give suitable adjustment against the working capital component while determining the ALP. Foreign exchange loss as non-operative expense - TPO held that the forex gain/loss has to be treated as operating in nature, which was confirmed by ld. DRP - HELD THAT - Similar issue was subject matter in appeal before the Tribunal in assessee s own case for the assessment year 2012-13 2017 (8) TMI 1700 - ITAT CHENNAI wherein held as rightly pointed out by the ld. D.R that earlier year the assessee claimed foreign exchange loss as operating expenditure. This year assessee has shifted its stand and claimed it as non-operating expenditure. There is no consistency in its approach and also no reason has been given for such a change. Being so, in our opinion, foreign exchange loss is to be treated as operating nature only - Respectfully following the above decision in assessee s own case for the assessment year 2012-13, the ground raised by the assessee stands dismissed for the assessment year 2013-14. Provision for doubtful debts - With regard to the provision for doubtful debts, recoverability of some receivables may be doubtful although not definitely irrecoverable - HELD THAT - In consistent with the observations given by the TPO for the assessment year 2014-15 we direct the AO to treat the provision for bad and doubtful debts as non-operating in nature for the assessment year 2013-14 as well. Thus, the ground raised by the assessee is allowed. Hanon Climate System India Pvt. Ltd. as not a comparable - assessee has excluded the comparable since the RPT was in excess of 25% in respect of Hanon Climate Systems India Pvt. Ltd. - HELD THAT - We are of the considered opinion that the TPO was not justified for including an incomparable company namely, Hanon Climate Systems India Pvt. Ltd., who s RPTs exceed 25%. Accordingly, we direct the TPO/AO to exclude the comparable M/s. Hanon Climate Systems India Pvt. Ltd. Thus, the ground raised by the assessee is allowed. Disallowance of set off of brought forward business losses from the previous years - HELD THAT - As on perusal of the past assessment records of the assessee, AO noticed that the assessee company was no longer possessing such brought forward losses in view of the additions made as per the assessment orders for those years. Therefore, as it stands, the assessee was not allowed to make any set off of brought forward losses and the whole assessed income has to be fully offered for taxation in the current assessment year 2013-14. AO has taken the brought forward losses adjusted as NIL for the purpose of computation of total income for the assessment year 2013-14. Before us, the assessee has not brought on record any details of possessing such brought forward losses. Thus, the ground raised by the assessee stands dismissed.
Issues Involved:
1. Customs Duty Adjustments 2. Working Capital Adjustment 3. Foreign Exchange Loss as Non-Operative Expense 4. Provision for Doubtful Debts 5. Inclusion of Hanon Climate Systems India Pvt. Ltd. as a Comparable Company 6. Disallowance of Set Off of Brought Forward Business Losses Detailed Analysis: 1. Customs Duty Adjustments The assessee contested the denial of differential adjustment for basic customs duty. The Tribunal noted that in previous assessment years (2011-12 and 2012-13), the TPO had allowed custom duty adjustments. The Tribunal directed the Assessing Officer to provide suitable adjustments against the customs duty component while determining the Arm's Length Price (ALP). 2. Working Capital Adjustment The TPO rejected the assessee's claim for working capital adjustment due to insufficient evidence. The Tribunal, however, referenced its previous rulings in the assessee's own cases for assessment years 2011-12 and 2012-13, where such adjustments were allowed. It directed the Assessing Officer to give suitable adjustments for the working capital component while determining the ALP. 3. Foreign Exchange Loss as Non-Operative Expense The assessee claimed foreign exchange loss as non-operative expenses, which the TPO and the DRP treated as operating in nature. The Tribunal upheld this decision, referencing its own ruling in the assessee's case for the assessment year 2012-13, where foreign exchange loss was treated as operating in nature. 4. Provision for Doubtful Debts The TPO treated the provision for doubtful debts as operating in nature, which the DRP upheld. However, for the subsequent assessment year 2014-15, the TPO accepted the provision as non-operating. The Tribunal directed the Assessing Officer to treat the provision for doubtful debts as non-operating for the assessment year 2013-14 as well, aligning with the TPO's treatment in 2014-15. 5. Inclusion of Hanon Climate Systems India Pvt. Ltd. as a Comparable Company The assessee argued that Hanon Climate Systems India Pvt. Ltd. had significant related party transactions (RPTs) exceeding 25%, making it incomparable. The Tribunal agreed with the assessee, citing various judicial precedents, and directed the TPO/AO to exclude Hanon Climate Systems India Pvt. Ltd. from the comparables. 6. Disallowance of Set Off of Brought Forward Business Losses The Assessing Officer disallowed the set-off of brought forward business losses, noting that the assessee no longer possessed such losses due to additions in previous assessments. The Tribunal upheld this disallowance as the assessee failed to provide evidence of possessing brought forward losses. Conclusion: The appeal was partly allowed for statistical purposes, with directives for adjustments in customs duty, working capital, and provision for doubtful debts, while upholding the treatment of foreign exchange loss and disallowance of brought forward business losses. The Tribunal also excluded Hanon Climate Systems India Pvt. Ltd. as a comparable company.
|
