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2014 (1) TMI 438 - AT - Income TaxDifference in the rates of the depreciation - Selection of comparable Held that - Honda Siel Power Products Ltd. v. CIT 2007 (11) TMI 8 - Supreme Court of India - failure to consider a decision of a co-ordinate Bench cited by the assessee is a mistake apparent from record - There is a mistake apparent from record in the order of the Tribunal dated July 22 2011 on account of non-consideration of the decision of the Special Bench in the case of Quark Systems - the order of the Tribunal dated July 22 2011 in relation to these two issues is modified and it is held that since contentions in relation to these two issues are raised by the assessee for the first time before this Tribunal and as such the Revenue authorities did not have an opportunity to examine the same thus the matter is remitted back to the file of the Assessing Officer for reconsideration of the entire matter in relation to these two issues. Quantification of the amount of risk Held that - There was no mistake apparent from record in the order of the Tribunal - the Tribunal has taken a conscious view on the consideration of all the relevant factors Decided partly in favour of Assessee.
Issues Involved:
1. Difference in the rates of depreciation of the assessee-company vis-a-vis comparable companies. 2. Objection to the selection of Visual Soft Technology Ltd. as a comparable. 3. Non-quantification of the amount of risk assumed by the assessee. Issue-wise Detailed Analysis: 1. Difference in the Rates of Depreciation: The Tribunal addressed the issue of the assessee's contention that the first appellate authority failed to consider differences in accounting policies, specifically regarding depreciation adjustments. The Tribunal noted that the assessee did not raise this ground before the first appellate authority or during transfer pricing proceedings. Consequently, the Tribunal rejected the ground as "not entertainable." The assessee argued that the Tribunal ignored the Special Bench decision in Quark Systems P. Ltd., which allows taxpayers to raise new grounds even if not previously raised, emphasizing the principle of substantial justice over technical considerations. The Tribunal acknowledged this oversight and remitted the issue back to the Assessing Officer for reconsideration, without expressing any opinion on the merits. 2. Objection to Visual Soft Technology Ltd. as a Comparable: The assessee objected to the inclusion of Visual Soft Technology Ltd. as a comparable due to its significant research and development expenses. The Tribunal initially rejected this contention, noting that the assessee had agreed to its inclusion during transfer pricing proceedings. However, the assessee cited the Special Bench decision in Quark Systems P. Ltd., which allows for the exclusion of a company as a comparable if substantial differences are identified, even if initially accepted. The Tribunal recognized the failure to consider this binding precedent and remitted the issue back to the Assessing Officer for reconsideration, ensuring that the principles of substantial justice are upheld. 3. Non-quantification of the Amount of Risk Assumed by the Assessee: The assessee contended that the Tribunal failed to quantify the amount of risk assumed, contrary to rule 10B(2)(b) requiring adjustments for "risks assumed." The Tribunal had previously concluded that the assessee operated in a risk environment and was not entitled to any adjustment for risks borne by comparable companies. Upon review, the Tribunal found no mistake apparent from the record in its original decision, as it had taken a conscious view considering all relevant factors. Thus, the Tribunal rejected the assessee's contention regarding this issue. Conclusion: The Tribunal modified its earlier order concerning the first two issues, remitting them to the Assessing Officer for reconsideration in light of the Quark Systems P. Ltd. decision. The third issue was upheld as decided, finding no apparent mistake. Consequently, the assessee's appeal was treated as partly allowed, and the miscellaneous application was partly allowed. Order Pronounced: The order was pronounced in court on April 8, 2013.
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