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2020 (2) TMI 878 - AT - Income TaxRectification of mistake - Transfer Pricing adjustment of export of FDF to AE - HELD THAT - The word assessee should be read as authorities in second line of para 18 of the above order. The ld. Counsel of the assessee has contended that ITAT finding is incorrect. He contends that various submissions and evidence has not been properly appreciated. By calling the factual finding as incorrect, the same cannot take the issue out of review being sought by the assessee. Furthermore, the various issues as mentioned above are finding of the fact by the Tribunal after considering the submissions and perusing the record. What the assessee is now seeking clearly review of the order not permissible u/s.254(2). Hence, if according to the assessee, the order of the ITAT needs to be visited again or the evidences submitted need re-appreciation again in light of assessee s arguments, the same would amount to review of the matter not permissible u/s.254(2). Hence, in our considered opinion, the Miscellaneous Application in this regard is liable to be dismissed and the same is dismissed as such. Disallowance of E-connectivity charges - Tribunal has noted that there were no convincing arguments by the ld. Counsel of the assessee, hence, the ITAT had upheld the order of the authorities below. Now, since it is the contention of the ld. Counsel of the assessee, assessee s own case which was in favour of assessee on the said issue has not been considered, in our considered opinion, there is a mistake apparent from the record in the order of the Tribunal. Hence, on the conclusion of the decision of Apex Court in the case of Honda Siel Power Products Ltd 2007 (11) TMI 8 - SUPREME COURT . Accordingly, we recall the order of the disallowance of e-connectivity charges.
Issues Involved:
1. Transfer Pricing Adjustment of Export of Finished Dosage Forms (FDF) to Associated Enterprises (AE) of ?3,20,67,090/- 2. Disallowance of E-connectivity Charges of ?4,53,29,476/- Issue-wise Detailed Analysis: 1. Transfer Pricing Adjustment of Export of FDF to AE: The assessee sought rectification of the ITAT's order, contending incorrect findings and erroneous reactions to their contentions. The primary arguments included: - Incorrect factual findings and rejection of segmental accounts. - Rejection of contentions regarding the principle of consistency. - Non-appreciation of additional submissions and evidence. - Incorrect observations about the use of unutilized production capacity and the quality of products exported to AEs. The ITAT adjudicated that the Transfer Pricing Officer (TPO) rightly rejected the Transactional Net Margin Method (TNMM) adopted by the assessee, favoring the Comparable Uncontrolled Price (CUP) method instead. The key reasons included: - The assessee's method was unreliable as it compared entity-level OP/OC for total exports instead of specific transactions with AEs. - Absence of segmental accounts in annual audited accounts. - Inappropriate benchmarking of different activities (import of API and export of FDF) using the same set of comparables. The TPO found an internal CUP in the form of local sales of identical products, rejecting the assessee's objections regarding differences in functions, assets, and risks (FAR). The Dispute Resolution Panel (DRP) directed an appropriate discount for additional marketing expenses incurred locally but found no significant economic differences affecting the price in open market transactions. The ITAT upheld the TPO's findings, noting that the assessee's argument about using surplus capacity was not raised before lower authorities and lacked cogency. The ITAT directed the Assessing Officer to follow the DRP's directions regarding ALP adjustments and reiterated that the exported products were of superior quality, complying with strict regulations. The ITAT concluded that the assessee's contentions amounted to seeking a review, not permissible under Section 254(2) of the Income Tax Act. Therefore, the miscellaneous application regarding this issue was dismissed. 2. Disallowance of E-connectivity Charges: The assessee contended that a favorable decision in its own case was ignored by the Tribunal. The ITAT acknowledged that the Tribunal had noted a lack of convincing arguments from the assessee's counsel, leading to the upholding of the authorities' order. However, recognizing the assessee's contention that its own favorable case was not considered, the ITAT found a mistake apparent from the record. Citing the Apex Court's decision in Honda Siel Power Products Ltd., the ITAT recalled the order on the disallowance of E-connectivity charges for fresh consideration. Conclusion: The miscellaneous application regarding the transfer pricing adjustment was dismissed, while the issue relating to the disallowance of E-connectivity charges was recalled for fresh consideration. The applications were partly allowed, and the order was pronounced in the open court on 22.01.2020.
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