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TMI Blog2011 (9) TMI 589X X X X Extracts X X X X X X X X Extracts X X X X ..... organization and thereby determines the cost of production/service for each product/segment. - As TPO didnot examined all records. - Appeal allowed for statistical purpose only. - ITA No. 1331 (Bang.) of 2010 - - - Dated:- 7-9-2011 - Smt. P. Madhavi Devi, and Shri A. Mohan Alankamony, JJ. Appearances by: Shri Vishveshwara Mudi Sonda for the Appellant. Shri Etwa Munda for the Respondent. ORDER A. Mohan Alankamony, Accountant Member - This appeal is filed by the assessee aggrieved by the order of Dispute Resolution Panel dated 29.9.2010 for the A.Y. 2006-07. The assessee has raised several grounds in its appeal and they are listed hereinbelow: Grounds of appeal I. Transfer pricing 1. The Hon'ble DRP and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxable income of Rs. 80,33,451/-. Initially the return was processed u/s. 143(1) of the Act on 29.2.2008 and subsequently taken up for scrutiny assessment and order u/s. 143(3) was passed on 12.10.2010. The company is engaged in the business of manufacturing Tapping Adaptors and Chucks. The assessee company had international transactions for more than Rs. 15 crores and therefore it had filed Form 3CEB. Accordingly the matter was referred to TPO for determining the correct ALP with prior approval of the ld. CIT. As per the provisions of section 92CA(4) of the Act, adjustments to the ALP as determined by the TPO was adopted. 3. At the beginning of the hearing, ld. AR submitted that the revenue had erred in concluding that the cost allocati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p time and increased cost of production. Ld. AR further argued that the company had earned lower margin mainly due to the strike period of 64 days during the financial year and this has resulted in higher cost. Ld. AR forcibly submitted that all records with respect to cost were available with the appellant and they were submitted before the ld. AO who had failed to examine the same. Details of stock register was provided for the financial year 2005-06, calculation of facility cost details were submitted and it was also explained that this cost are not directly proportionate to the sales value for the AE and non-AE since certain costs which are not incurred towards AE are not allocated to the segment. The details of the expense not allocate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of cost accountancy. Financial accountancy only records the financial transaction occurred during the previous year in the books of accounts in a prescribed manner, whereas books of accounts pertaining to cost accountancy picks up the financial transaction from the financial books of accounts and allocates it to the various cost centers in the organization and thereby determines the cost of production/service for each product/segment. On the one hand, the assessee claims that it has maintained all such records and placed before the revenue, however, on the other hand, we do not find any such observation from the order of the ld. TPO. The observation in this regard by the ld. AO is reproduced hereinbelow to reveal the fallacy: "From wha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cturing as a whole the taxpayer has incurred loss whereas the comparables selected in the TP document have earned profit margin (to sale) of 12.21% on the basis of their current year data. Therefore, the international transactions are not at arm's length within the meaning of section 92C(3) of the I.T. Act read with Rule 10B(1)(e) of the I.T. Rule." 7. Considering the forceful submission of the Ld. AR that this issue is a major factor in deciding this case and therefore it has to be remitted back to the file of the Ld. AO needs to be judiciously considered. On our careful examination of the facts and circumstances of the case, in the interest of justice, we are of the considered view that the entire matter needs a fresh examination. There ..... X X X X Extracts X X X X X X X X Extracts X X X X
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