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2023 (8) TMI 210 - AT - Income TaxTP Adjustment - disallowance of 5% marked up in relation to purchase of certain fixed assets (i.e. Smoke Meter and Heating Channel) and a non consideration of evidence in respect of the same - HELD THAT - It is the specific case of the assessee is that the CIT(A) has relied on the remand report of the TPO without appreciating that TPO in relation to smoke meter and heating channel looked only at A.E and third party invoice A.O for Financial Year 2010-11 and over looked the A.E and third party invoice for impugned Financial Year 2011-12 and did not refer to Invoice No. 3011101638 dated 03/11/2021 wherein the aforesaid asset were sold by AVL List GmPG to third party customer. Therefore, in our considered opinion, if the matter is remanded to the file of A.O to consider the A.E and third party invoice for the Financial Year 2011-12, Invoice and other details submitted by the assessee and decide the said issue afresh, the substantial justice would be rendered. Accordingly, we allow the Grounds of Appeal for statistical purpose with a direction to the A.O. for de-novo consideration for the issue by considering all the invoices and details submitted by the assessee in the right perspective and pass order in accordance with law. Appeal of the assessee is allowed for statistical purpose.
Issues involved:
The issues involved in the judgment are related to Transfer Pricing adjustments, disallowance of mark-up on purchase of fixed assets, rejection of rectification application, application of Transactional Net Margin Method (TNMM), initiation of penalty proceedings under section 271(l)(c) of the Act, and charging of interest under section 234B and 234C of the Act. Transfer Pricing Adjustment: The assessee appealed against the order of the Commissioner of Income Tax (Appeals) regarding the Transfer Pricing Officer's adjustment on the purchase of fixed assets. The Tribunal found that the TPO had not considered all relevant invoices and details submitted by the assessee for the Financial Year 2011-12. Therefore, the matter was remanded to the Assessing Officer for de-novo consideration to ensure substantial justice. Disallowance of Mark-up on Fixed Assets: The Tribunal considered the disallowance of a mark-up on the purchase of fixed assets, specifically 'Smoke Meter' and 'Heating Channel'. The assessee provided evidence of pricing comparison with third-party sales, demonstrating the Arm's Length Price. The Tribunal noted that the CIT(A) had relied on the TPO's report without considering all relevant invoices for the Financial Year 2011-12. The matter was remanded for a fresh decision by the Assessing Officer. Rejection of Rectification Application: The assessee filed a rectification application contending that the TPO had overlooked certain invoices. The CIT(A) dismissed the application, stating that the TPO's findings were final. The Tribunal acknowledged the need for a reevaluation of the issue based on all submitted details and invoices for the Financial Year 2011-12. Application of Transactional Net Margin Method (TNMM): The Tribunal highlighted the rejection of the Transactional Net Margin Method (TNMM) by the CIT(A) and TPO, emphasizing the need for a comprehensive analysis of closely linked transactions. The Tribunal directed the Assessing Officer to consider all relevant evidence for a fair decision. Initiation of Penalty Proceedings: The Tribunal addressed the initiation of penalty proceedings under section 271(l)(c) of the Act, noting that the Assessing Officer had mechanically initiated the process without adequate satisfaction. The Tribunal emphasized the importance of recording proper reasons for penalty proceedings to ensure procedural fairness. Charging of Interest under Section 234B and 234C: The Tribunal reviewed the charging of interest under sections 234B and 234C of the Act, noting the assessee's contention regarding the interest calculation. However, the Tribunal's decision primarily focused on the Transfer Pricing adjustments and related issues, leading to the remand for a fresh assessment by the Assessing Officer.
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