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2018 (7) TMI 579 - AT - Income TaxTPA - claim of the appellant for the Glazing Loss in the commodity exported rejected - price list published by MPEDA relied - Held that - TPO made adjustment after examining the invoice produced by the assessee that it has exported products having glazes ranging from 15% to 25%. The product of the assessee is having various glazes ranging from 15% to 25%, as such, the assessee s product could be compared with the price list published by MPEDA which is for 20% glaze after making suitable adjustment which the TPO has done. Further, the assessee has not brought on any evidence to show that the assessee s product is having 25% glazes so that it cannot be compared with the price list published by MPEDA. Being so, we do not find any merit in the argument of the Ld. AR and the same is rejected. Disallowance of EIA Monitoring fee paid to Export Inspection Agency, for non deduction of tax - Held that - AR was not able to show that the payment to Export Inspection Agency is not liable for deduction of TDS so as to attract the provisions of section 40(a)(ia) of the Act. In view of this, we do not find any merit in the argument of the Ld. AR and uphold the order of the lower authorities. Thus, this ground of appeal of the assessee is dismissed.
Issues Involved:
1. Rejection of the claim for Glazing Loss in exported commodities. 2. Disallowance of EIA Monitoring fee paid to Export Inspection Agency for non-deduction of tax. Detailed Analysis: 1. Rejection of the Claim for Glazing Loss in Exported Commodities: The assessee's appeal challenged the rejection of their claim for Glazing Loss in exported commodities by the Dispute Resolution Panel (DRP), Bangalore. The assessee argued that their products, primarily seafood, had varying glaze percentages (up to 25%), which the Marine Products Export Development Authority (MPEDA) rates did not account for, as MPEDA rates were based on 10-20% glaze. The Transfer Pricing Officer (TPO) had used MPEDA data for benchmarking but rejected the assessee's claim for a 3% adjustment to account for higher glaze percentages, citing lack of evidence and arbitrary adjustment without scientific basis. The DRP upheld the TPO's findings, noting that the assessee failed to provide evidence to support their claim that higher glaze percentages resulted in lower prices. The DRP also pointed out inconsistencies in the invoices and the lack of a clear basis for the 3% adjustment. Consequently, the DRP rejected the assessee's objections and confirmed the TPO's adjustments. Upon appeal, the tribunal found no merit in the assessee's arguments, noting that the TPO had made suitable adjustments based on the MPEDA price list for 20% glaze. The assessee failed to demonstrate that their products with 25% glaze could not be compared with the MPEDA prices. Thus, the tribunal dismissed the assessee's grounds on this issue. 2. Disallowance of EIA Monitoring Fee Paid to Export Inspection Agency for Non-Deduction of Tax: The second issue involved the disallowance of ?18,02,939/- paid as EIA Monitoring fee to the Export Inspection Agency (EIA) due to non-deduction of tax at source. The assessee argued that EIA, being an autonomous body established by the Central Government, was not subject to TDS provisions under section 194J of the Income Tax Act, 1961. However, the Assessing Officer (AO) and the DRP disagreed, noting that no circular or certificate exempting EIA from income tax had been issued, and thus, TDS was applicable. The DRP found that the assessee had not provided any documentation to support their claim that EIA was exempt from TDS. The tribunal upheld the DRP's decision, as the assessee failed to show that the payment to EIA was not liable for TDS. Consequently, the tribunal dismissed the assessee's appeal on this ground as well. Conclusion: The tribunal dismissed the assessee's appeal in its entirety, upholding the DRP's and TPO's decisions on both issues. The rejection of the claim for Glazing Loss was affirmed due to the lack of evidence and arbitrary adjustment claims, while the disallowance of the EIA Monitoring fee was confirmed due to the applicability of TDS provisions. The order was pronounced on July 5, 2018.
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