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TMI Blog2009 (6) TMI 125X X X X Extracts X X X X X X X X Extracts X X X X ..... cial principles has to be the actual amount by which the assets of business got depleted between the two dates separated by a year. It cannot be depreciation under tax or companies rules or as per policy of the company. In the case in hand. Revenue authorities went wrong in disregarding the context and purpose for which the net profit was to be computed. Depreciation, which can have varied basis and is allowed at different rates is not such an expenditure which must be deducted in all situations. It has no direct connection or bearing on price, cost or profit margin of the international transactions. Principles emphasized in the case of Bangalore Clothing [ 2003 (1) TMI 89 - BOMBAY HIGH COURT] are attracted here. Object and purpose of the transfer pricing to compare like with the like, and to eliminate differences, if any, by suitable adjustment is to be seen. Therefore, there was justification on the part of the taxpayer in pleading that profits be taken without deduction of depreciation as depreciation was leading to large differences in margins for various reasons. The AO, after looking into details of financial results of comparable enterprises, excluded all companie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined afresh after remand. Request was opposed by the ld DR. In the present case, Revenue authorities carried TP analysis, mainly on the basis of information furnished by the taxpayer. Both the parties accepted some enterprises as suitable comparables and carried comparative analysis. It is neither permissible nor desirable at this stage of second appeal to permit a somersault and accept that taxpayer's report was not correct and a fresh report should be permitted to be filed and thereafter fresh TP analysis be carried. No such argument was raised or taken by the taxpayer or made in impugned orders. We see no good reason to permit the taxpayer to make a totally new case which will knock off earlier assessments and require to carry fresh analysis from the first stage. The taxpayer has not placed any material on record to show that alleged segmental profit in its case or in the case of comparables is available in public domain and would give different results. As is clear from discussion, both the parties proceeded to accept material on record as relevant material and carried TP analysis which has been thoroughly discussed above. Hence, the request of the taxpayer to permit to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed enterprises (AE): Details of international transactions with AEs Assessment year 2003-04 1. Sale of goods - Rs. 4,49,00,948 2. Purchase of parts and components - Rs. 80,93,725 3. Royalty - Rs. 29,35,771 4. Cost recharges - Rs. 19,06,700 TNMM used as most appropriate method 3.1 In the TP report for asst. yr. 2003-04, taxpayer's auditor had stated that transactions with AE were carried at arm's length and price charged/paid was justified and comparable, using transactional net margin method (TNMM) as the most appropriate method for benchmarking (international transactions). It was noted that for comparative analysis, the taxpayer had focused on the operative result of comparable companies for the financial years 2001-02 and 2002-03 instead of contemporaneous data for financial year 2002-03 only. Profit level indicator (PLI) chosen for selection of comparable companies was cash profit/sales. The TP report further stated that above ratio was used in order to remove the effect of differences in capacity utilization of the taxpayer and the comparable companies. Cash profit was a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... followed by the taxpayer. Any items of income and expenditure, which have no bearing on the margins of the transaction under examination, have to be excluded. Financial cost and interest income not directly related to the transactions or profit or loss on sale of assets are also to be excluded. (e) Cash profit used by the appellant in the numerator is not identical in meaning and substance to the net operating profit margin as the same is more akin to gross profits rather than net profits." 4.1 The TPO accordingly issued show cause notice dt. 3rd March, 2006 to the taxpayer requiring to meet above objections on its choice of PLI and working of profit margin. The taxpayer, in its reply, reiterated that cash profit/sale ratio was a ratio well accepted to compute operational profit and therefore the same could not be rejected. Margins in the case of taxpayers and comparable were computed by adopting same base i.e. ratio of operating profit and total cost excluding depreciation from the numerator and denominator. This way margin disclosed was claimed to be reasonable and comparable. The TPO, however, rejected above computation with the following reasons: "(a) Rule 10B(1)(e) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g. 0.74 24.73 2.99 Co. Ltd. -------------------------------------------------------------------- 9. Frontier Springs Ltd. 0.23 8.7 2.64 -------------------------------------------------------------------- 10. Bhagwati Autocast Ltd. 0.47 20.02 2.34 -------------------------------------------------------------------- 5. In the light of provisions of r. 10C(2)(d) of the Rules, the TPO concluded that since no accurate adjustment could be made to account for different levels of capacity utilization, selection of comparables themselves have to be made on the basis of similar ratio of depreciation to total cost. Accordingly, the following 3 comparables (Table 4) which had somewhat similar ratios of depreciation to total cost as of the taxpayer, were selected as final comparables for finding mean operating margin of profit which was taken at 6.66 per cent as under: Table 4 from CIT(A)'s order ---------------------------------------------------------------- Sl. Name % of OP TC PLI No. depreciation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the total sales value would be revised upward by an amount of Rs. 1,16,03,004. Since the proposed adjustment of Rs. 1,16,03,004 exceeded 5 per cent of the international transaction amounting to Rs. 28,91,857, the entire TP adjustments were to be added to the total income of the taxpayer. Accordingly, after providing an opportunity of being heard to the taxpayer, TP adjustments of Rs. 1,16,03,004 were made to the total income of the taxpayer for the asst. yr. 2003-04. Assessment year 2004-05 5.3 In the period relevant to asst. yr. 2004-05, the taxpayer showed to have carried the following international transactions with its AEs. The transactions were shown in TP report to be at arm's length by adopting TNMM method as under: Details of international transactions Table 1 -------------------------------------------------------------- Sl. International transactions TP method Value No. used (in Rs.) -------------------------------------------------------------- 1. Purchase of parts and components TNMM 4,38,48,119 ----------------------------------- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s selected by the taxpayer. He observed that the taxpayer was the leading rear view mirror manufacturer for the Indian automobile industry and this product approximately contributes 85 per cent to the company's top line. The export of cable assemblies contribute to the balance of the top line. An analysis of the product line of some of the comparables revealed that they could actually not be considered as real comparables. 6.2 The TPO excluded Bhagwati Autocast Ltd. as that company was incorporated in 1982 and was engaged in business of castings for tractor, compressor and automobile industries. 6.3 Jay Ushin Ltd. was excluded as it was established in 1986 and was manufacturing automobile equipment like door latches, switch, key sets and heater control. The company was also having substantial related party transactions. 6.4 Shard low India Ltd. was excluded and it was established in 1960 and the company was manufacturing forgings for crankshafts, axle beams, stub axles and steering arms and connection rods for 2, 3, 4 and 6 cylinder engines. 6.5 Minda HUF Ltd. was incorporated in 1986 and enjoyed market leadership in security systems for automotive industry. 6.6 Swaraj Au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... abase) -------------------------------------------------------------------- 10. Tata Auto Plastic Systems 13.59 140.79 9.65 Ltd. (Prowess Database) -------------------------------------------------------------------- Arithmetical 11.10 mean -------------------------------------------------------------------- Adjustments made by TPO 6.8 The ratio of net operating profit/sales was worked out by the TPO by using data for the financial year 2003-04 as under: Net sales Rs. 30,75,86,918 Profit before tax Rs. 2,47,08,770 Add: Financial expenses Rs. 23,04,381 Rs. 2,70,13,151 Less: Non-recurring income Rs. 39,67,927 Net operating profit R s. 2,30,45,224 OP/sales (2,30,45,224 - 30,75,86,918) 7.49% 7. The arithmetic mean of OP/sales of the comparables was worked out at 11.10 per cent and was taken to be the arm's length ratio. As it exceeded ratio of 7.49 per cent of the taxpayer, TP adjustment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st. yr. 2004-05. Appeal by the taxpayer before the CIT(A) No fault found in assumption of jurisdiction by TPO/AO 7.2 The taxpayer challenged above TP adjustments in both the years and carried the matter in appeal before the learned CIT(A). Several technical objections on account of initiation of proceeding under the TP regulations were raised. Reference made to the TPO was also challenged. It was claimed that assumption of jurisdiction by the AO and by the TPO was not in accordance with law. The learned CIT(A) on consideration of technical objections, found no error in the approach of the AO in assuming jurisdiction or in making reference to the TPO. All the technical objections were thus rejected. We have not noted these technical objections in detail as learned counsel appearing for the taxpayer fairly conceded that the Benches of Tribunal have already decided these issues and impugned orders of CIT(A) were quite in line with the Tribunal's views. The learned counsel further did not challenge application of decision of jurisdictional Delhi High Court in the case of Sony India (P) Ltd. vs. CRDT (2006) 206 CTR (Del) 157 : (2007) 288 ITR 52 (Del) by the learned CIT(A) to the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been part of FAR analysis of comparables in the taxpayer's TP report. The taxpayer has ignored this aspect and now cannot be allowed to come up with these arguments during the appellate proceedings. (iv) Fresh investment was being made in automobile ancillary industry which was in the expansion phase. Therefore, there is no requirement to exclude depreciation in computation of PLI. 8.1 The learned CIT(A) also rejected contention of the taxpayer that its plant was set up in July, 2002 and enhanced depreciation has reduced its profitablilty and, therefore, depreciation need to be ignored. ALP determined by taking ratio (OP)/(TC) 8.2 learned CIT(A) then examined result of profit (OP) to total cost (TC) of ten companies with following observations: "The appellant had chosen to aggregate all the international transactions of purchase, sale and royalty rather than going in for a transaction-wise analysis. The total cost includes payment of royalty to the AEs and payments for components that are used in the manufacturing process. Royalty is paid for the use of patented technology and the same technology is used in the enterprise level production process. The same is true for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ------------------------------------ Schefenacker Motherson Ltd. 0.14 19.58 0.74% ---------------------------------------------------------------- Exclusion of comparable and determination of ALP 8.3 The learned CIT(A) thereafter mentioned the characteristics required to be examined in selection of uncontrolled transactions or enterprises. He noted steps required to be taken for computing ALP. After analysis of comparables, the learned CIT(A) excluded Roto Pumps Ltd. as that company was engaged in manufacturing of progressive cavity pumps used in industries such as sugar, paper, agriculture, oil and gas, waste water treatment etc. The job profile of company was quite different. So was the case of Denison Hydraulics India Ltd. and Frontier Springs Ltd. Accordingly, above three companies were excluded from list of comparables. On the basis of the remaining six companies, the learned CIT(A) worked out mean operative profit at 6.43 per cent as against 0.74 per cent disclosed by the taxpayer as per details given below: Table 8 ---------------------------------------------------------------- Sl. Name ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ----- 95% of ALP 5,50,62,172 ---------------------------------------------------------------- 10,2 Learned CIT(A) also rejected contention of the assessee that benefit of proviso (safe havens) i.e., +/- 5 per cent of the adjusted mean profit be allowed to the taxpayer. Assessment year 2004-05 9. For the asst. yr. 2004-05, the learned CIT(A) noted TNMM comparables taken by the TPO and his working of profit margin was at 11.10 per cent. He also reproduced in the impugned order the adjustment made by the AO based on the order of the TPO at Rs 1,10,96,223. He also took note of argument of the taxpayer that TPO wrongly applied PLI of operating profit/sales (OP/sales) instead of cash profit to sales suggested by the taxpayer. TPO's action in not considering material differences between the taxpayer company and the comparables was also challenged. It was argued that TPO wrongly excluded five companies out of comparables. The learned CIT(A) also noted reasons given by the TPO for rejecting taxpayer's claim which were quite similar to the reasons given for the asst. yr. 2003-04. These need not be repeated here. CIT(A)'s TP analysis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Capitaline Database) ---------------------------------------------------------------- 9. Phoenix Lamps Ltd. 18.55 147.41 12.58% (Prowess Database) ---------------------------------------------------------------- 10. Pricol Ltd. 58.78 364.09 16.14% (Prowess Database) ---------------------------------------------------------------- 11. Rasandik Engineering 5.73 118.49 4.84% Inds. India Ltd. (Prowess Database) ---------------------------------------------------------------- 12. Shardlow India Ltd. 2.02 59.16 3.41% (Prowess Database) ---------------------------------------------------------------- 13. Simmonds Marshall Ltd. 1.04 12.3 8.46% (Prowess Database) ---------------------------------------------------------------- 14. Swaraj Automotives Ltd. -0.65 27.93 -2.33% (Capitaline Database) ---------------------------------------------------------------- 15. Tata Auto Plastic Systems 11.83 128.96 9.17% Ltd. (Prowess Database) ------------------------------------------------------------ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent industry in India. 3. The bus body building division has benefited from the initiatives of various Governments to phase out old vehicles. 4. Consolidated operating profit of the company was used in the TP analysis. --------------------------------------------------------------------- 3. Bhagwati Autocast Ltd. 1. Engaged in manufacturing Accepted by the (Prowess of highly specialized TPO. Held not to Database) castings for the automobiles, be a correct tractor, compressor and comparable. hydraulic industries. 2. The company performed well in terms of capacity utilization and sales revenue. However, due to steep increase in the prices of basic raw materials, the company's profitability has not been achieved full as per projections. 3. The company succeeded to get better prices for its products during the last quarter of the year. 4. The new hand moulding project started in the middle of the year added to the production capacity. --------------------------------------------------------------------- Determination of ALP by CIT(A) 10. With similar observations as above in other 12 cases, the CIT(A) held that six comparables namely-(1) Automobile Corpn. of Goa Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5.97% per information submitted to the TPO for the current financial year 2003-04, submitted vide letter dt. 10-10-2006. ---------------------------------------------------------------- Table 10 ---------------------------------------------------------------- Computation of ALP of international transactions: ---------------------------------------------------------------- Total cost of the assessee company 28,45,41,694 ---------------------------------------------------------------- Operating profit 2,30,45,224 ---------------------------------------------------------------- Operating profit at arm's length margin (total cost * 1114) 3,16,97,945 ---------------------------------------------------------------- Adjustment to the operating profit (3,16,97,945 - 2,30,45,224) 86,52,721 ---------------------------------------------------------------- ALP of the international transaction of sale (Rs. 5,11,49,848 + Rs. 86,52,721) 5,98,02,569 -------------- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he learned Departmental Representative also opposed request of the taxpayer to raise additional ground of appeal or file additional evidence. Finding of the Tribunal 13. We have given careful thought to the rival submissions of parties. Shri Mitra did not raise any of the technical objections on assumption of jurisdiction by the AO under s. 92 or on reference to TPO under s. 92CA of the Act as total value of international transactions exceeded Rs. 5 crores in both the years under appeal. It was also not disputed that comparables taken into account by CIT(A) were supplied by the taxpayer. It was submitted that the learned CIT(A) was in error in selection of comparables and inclusion of depreciation for computing net profit. In the light of submissions of the parties including their written submissions, we proceed to consider the controversies raised before us, the main being whether depreciation could be disregarded in the TP analysis both in the case of the taxpayer and the comparables. Revenue (Department) has accepted CIT(A)'s order 14. We have already noted that the Department has accepted orders of the learned CIT(A) superseding orders of the TPO and the AO. We ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otton Mills Ltd. (1996) 133 CTR (AP) 398 : (1996) 219 ITR 404 (AP); (iii) CIT vs. Andhra Cotton Mills Ltd. (1998) 144 CTR (AP) 21 : (1997) 228 ITR 30 (AP); (iv) CIT vs. Friends Corporation (1989) 79 CTR (P H) 181 : (1989) 180 ITR 334 (P H); (v) CIT vs. J.K. Industries Ltd. (2000) 158 CTR (Cal) 17 : (2000) 241 ITR 537 (Cal); (vi) CIT vs. Shri Someshwar Sahakari Sakhar Karkhana Ltd. (1989) 75 CTR (Bom) 135 : (1989) 177 ITR 443 (Bom); and (vii) Chief CIT (Admn.) vs. Machine Tool Corporation of India Ltd. (1992) 108 CTR (Kar) 110 : (1993) 201 ITR 101 (Kar). Opposite view 16. The opponent of the above view while accepting that depreciation is a capital loss, justify its deduction, to replace the value of an asset to tl1e extent it has depreciated during the period of accounting-and corresponding allowance for depreciation takes its place. Therefore, when arriving at profits for the relevant period, the amount of depreciation has to be deducted, which must be replaced first, as otherwise, initial capital loss would, to that extent, be incorrectly and falsely converted into and treated as profits. Paton in his "Accounts' Handbook" described depreciation as out-of-pocket c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should match loss actually suffered in the relevant period. It is allowed as a fixed notional allowance. Principles governing "assessable" "commercial" or "operating" profit 16.3 Provision of a statute like Expln. 5 to s. 32 of the Act makes it compulsory to take depreciation into consideration in computing taxable profit (total income). Even in the case of the taxpayer before us for the two years under consideration, depreciation has been taken into account in computing its total income. Rs. 2,18,97,046 and Rs. 1,82,99,975 against Rs. 1,60,13,886 and Rs. 1,33,54,123 claimed in the P L a/c have been allowed in asst. yrs. 2003-04 and 2004-05 respectively. In the first year, it has been allowed at a figure much higher than claimed in the P L a/c. However, as at present, we are not concerned with above statutory provision or with the computation of total income. The reason being the following observations of Supreme Court in the case of CIT vs. Bipinchandra Maganlal Co. Ltd. (1961) 41 ITR 290 (SC): "There is no definable relation between the assessable income and the profits of a business concern in a commercial sense. Computation of income for purposes of assessment of income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a notional amount under tax or company law or some policy or statutory provision. If any part of the amount claimed as depreciation does not represent the true amount of depreciation suffered, by plant and machinery or any other asset, then to the extent of such excess would only be the profit of the enterprise wrongly claimed as depreciation. It is nobody's case that depreciation in case of comparables or tested party was depreciation actually suffered and not depreciation claimed under artificial rules. Indian Transfer Pricing Regulations: 18. Having noted vicissitudinary nature of "profit" and its connection with "depreciation", we may now refer to Indian TP Regulation under which ALP is required to be determined to consider whether deduction of depreciation is imperative to compute margin or mean operational margin. 18.1. The Indian TP Regulations is a complete code and are contained in Chapter X of the Act, supplemented by rr. 10A to 10E of IT Rules. Title of s. 92 is "Computation of income from international transaction having regard to ALP". Sub-ss. (1) and (2) of s. 92 [sub-s. (3) not being relevant here] are as under: "92. Computation of income from internationa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... saction or a number of such transactions is computed having regard to the same base; (iii) the net profit margin referred to in sub-cl. (ii) arising in comparable uncontrolled transactions is adjusted to take into account the differences, if any, between the international transaction and the comparable uncontrolled transactions, or between the enterprises entering into such transactions, which could materially affect the amount of net profit margin in the open market; (iv) the net profit margin realised by the enterprise and referred to in sub-cl. (i) is established to be the same as the net profit margin referred to in sub-cl. (iii); (v) the net profit margin thus established is then taken into account to arrive at an ALP in relation to the international transaction. (2) For the purposes of sub-r. (1), the comparability of an international transaction with an uncontrolled transaction shall be judged with reference to the following, namely: (a) the specific characteristics of the property transferred or services provided in either transaction; (b) the functions performed, taking into account assets employed or to be employed and the risks assumed, by the respective part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ities under comparison are found to be similar or almost similar and this "almost" representing differences are evaluated and adjustments are made to bring transaction or enterprises to the same level. If a similar uncontrolled transaction is available for comparison, then ALP is determined by taking such price of similar uncontrolled transaction carried in similar circumstances. As similar transactions are not easy to find, and, therefore, an attempt is made to find entities carrying similar functions and their profit margin or mean of such margin from a range of entities, is taken into account and compared with profit margin of entity involved in international transaction called "tested party". Even here it is fundamental that comparable selected should carry similar functions in similar circumstances. This is achieved by carrying functional, assets and risk (FAR) analysis of the tested party and comparables. If there are any differences between selected comparables and the tested party, then such differences are adjusted. This has been emphasized in US and OECD guidelines and in sub-rr. (2) and (3) of r. 10B quoted above. These principles are applicable to analysis carried under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n pleading that profits be taken without deduction of depreciation as depreciation was leading to large differences in margins for various reasons. Guidance Note of ICAI accepts cash profit/sale as a base under TNMM 20. The taxpayer also relied upon para 22.4 of guidance note on transfer pricing issued by ICAI suggesting cash profit/sales as one of the ratios to be applied for computing ALP under the TNMM as per Indian Regulations. Sub-title (g) of Table 5 under para 22 of guidance note provides as under: "(g) Some of the ratios that can be used for determining the ALP under the method are: (i) ratio of net profit before tax to sales. (ii) ratio of net profit before interest and tax to sales. (iii) ratio of cash profit to sales (iv) ratio of net profit before tax to shareholders' funds (v) ratio of net profit before interest and tax to assets, (vi) Berry ratio-ratio of operating cost to operating revenue." OECD Guidelines support taxpayer's case 20.1 The taxpayer had throughout contended that cash profit/sale be adopted as a PLI ratio. Exclusion of depreciation was justified, "to eliminate difference in technology used, age of assets used in production, diff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Depreciation Total cost % of No. (in Rs. (in Rs. depreciation crores) crores) in total -------------------------------------------------------------------- 1. Schefenacker Motherson Ltd. 1.6 19.58 8.17 -------------------------------------------------------------------- 2. Ring Plus Aqua Ltd. 2.36 27.92 8.45 -------------------------------------------------------------------- 3. Coventry Coil-O-Matic 0.91 15.19 5.99 (Haryana) Ltd. -------------------------------------------------------------------- 4. Roto Pumps Ltd. 0.71 12.00 5.91 -------------------------------------------------------------------- 5. Gujarat Automotive Gears 0.23 4.82 4.77 Ltd. -------------------------------------------------------------------- 6. Dennison Hydraulics India 0.36 10.6 3.39 Ltd. -------------------------------------------------------------------- 7. E.L. Forge Ltd. 1.3 41.95 3.09 ----------------- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15.91 crores Ltd. -------------------------------------------------------------------- 20.5 It is more than 5 and 15 times of the taxpayer. Size of the assets besides the age of the assets of comparables was leading to difference in the profit margins and in mean margin. On the contrary, claim of depreciation is eating up large chunk of profit in the case of the taxpayer. How above differences were not considered in applying FAR analysis? The learned CIT(A) has not said a word on "asset" employed and "risks" suffered by the tested party and the comparables. Thus, material differences needing suitable adjustment were ignored and a flawed analysis was carried even in appellate proceedings. 20.6 The AO, after looking into details of financial results of comparable enterprises, excluded all companies except the three, although two of companies selected, namely Coventry Coil-O-Matic (Haryana) Ltd. and Roto Pumps Ltd. percentage of depreciation to total cost had differences of more than 2 per cent as shown above, which, in our opinion, is quite substantial. The learned CIT(A) is right in holding that working of mean profit of the TPO on the basis of three selected companies wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stated above merely on general observations that automobile ancillary industry is in the expansion phase. Taxpayer is seeking adjustment of differences on account of depreciation and no plausible reason has been given for not accepting this claim. There is no finding that there are no differences in claim of depreciation and, therefore, it should have been excluded in computing "operating profit" as warranted by rules. On the other hand, the differences as per the chart are accepted. The finding that cash profit cannot be considered is not legally correct. The taxpayer in order to get adjustment of difference in depreciation furnished arm's length working after excluding depreciation and by taking all other expenses into consideration and showed that such profit of the taxpayer was quite comparable to the mean margin of other comparables similarly computed. This demonstratively showed that deduction of depreciations was making huge difference and required suitable adjustment. This claim has not been challenged. It is clear that the best way to adjust difference on account of depreciation was to ignore depreciation both in case of the tested party and the comparables. After all TP a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... March, March, March, 2003 2003 2003 --------------------------------------------------------------------- Company name Reference Sales Total Operating Cost profit (TC) (OP) --------------------------------------------------------------------- Bhagwati Autocast Ltd. Page 662 11.98 13.59 -1.61 --------------------------------------------------------------------- Coventry Coil-Q-Matric Page 696 19.37 17.53 1.84 (Haryana) Ltd. --------------------------------------------------------------------- E.L. Forge Ltd. Page 736 39.9 36.05 3.85 --------------------------------------------------------------------- Frontier Springs Ltd. Page 737 10.19 9.72 0.47 --------------------------------------------------------------------- Gujarat Automotive Gears Ltd. Page 771 4.73 4.64 0.09 --------------------------------------------------------------------- Average (CIT comparables) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 269 So, it is within ALP as per Sony India [Soni India (P) Ltd. vs. Dy. CIT (2008) 118 TTJ (Del) 865-Ed.] and Development Consultants [Development Consultants (P) Ltd. vs. Dy. CIT (2008) 115 TTJ (Kol) 577-Ed.] Assessment year 2003-04 (Financial year 2002-03) --------------------------------------------------------------------- March, March, March, 2003 2003 2003 --------------------------------------------------------------------- Company name Reference Sales Total Operating Cost profit (TC) (OP) --------------------------------------------------------------------- Amforge Industries Ltd. Page 536 189.84 172.69 17.15 --------------------------------------------------------------------- Bhagwati Autocast Ltd. Page 576 22.87 22.58 0.29 --------------------------------------------------------------------- Bharat Forge Ltd. Page 609 907.71 709.86 197.85 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 51.19 13.66% --------------------------------------------------------------------- 0.01 14.25 32.81 19.77% 12.58% 133.15 24.64% --------------------------------------------------------------------- 0 20.55 79.93 18.76% 16.14% 343.54 23.09% --------------------------------------------------------------------- 0.92 1.29 4.23 6.91% 3.41% 56.95 7.43% --------------------------------------------------------------------- 0.01 0.35 1.4 10.49% 8.46% 11.94 11.73% --------------------------------------------------------------------- 0.36 6.7 18.89 13.42% 9.17% 121.9 15.50% --------------------------------------------------------------------- 13.87% 11.14% 16.85% --------------------------------------------------------------------- 1.83 3.81 10.83% 5.97% 31.40 12.14% --------------------------------------------------------------------- CP/TC : +/- 5% calculation (Amount in Rs.) Expenses excluding depreciation 31,40,00,687 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ise. Consolidated accounts are generally maintained and are available on public domain. In the present case, Revenue authorities carried TP analysis, mainly on the basis of information furnished by the taxpayer. Both the parties accepted some enterprises as suitable comparables and carried comparative analysis. It is neither permissible nor desirable at this stage of second appeal to permit a somersault and accept that taxpayer's report was not correct and a fresh report should be permitted to be filed and thereafter fresh TP analysis be carried. No such argument was raised or taken by the taxpayer or made in impugned orders. We see no good reason to permit the taxpayer to make a totally new case which will knock off earlier assessments and require to carry fresh analysis from the first stage. The taxpayer has not placed any material on record to show that alleged segmental profit in its case or in the case of comparables is available in public domain and would give different results. As is clear from above discussion, both the parties proceeded to accept material on record as relevant material and carried TP analysis which has been thoroughly discussed above. In the above backgrou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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