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TMI Blog2014 (5) TMI 742X X X X Extracts X X X X X X X X Extracts X X X X ..... d to be void or infructuous in the case. The assessing authority is the best judge of the situation and has to arrive at its conclusion without any bias and on rational basis - The Appellate Tribunal shall by itself not embark enquiry afresh into the facts and comment upon the similarities or dissimilarities of the comparables on the basis of new pleas which in fact is under the domain of the assessing authority - It is also claimed by the assessee and has fairly being admitted by the Revenue that the assessee did not have reasonable and effective opportunity of explaining its case before the authorities – thus, the matter is remitted back to the Assessing Authority for fresh adjudication – Decided in favour of Assessee. - I.T.A. No. 408/DEL/2014 - - - Dated:- 7-5-2014 - Shri R. P. Tolani And Shri B. R. Jain,JJ. For the Petitioner : Sh. Manoj Paradasani, CA For the Respondent : Sh. Peeyush Jain, CIT(DR) and Sh. Yogesh Kumar Verma, CIT(DR) ORDER Per B. R. Jain : AM. This appeal by the assessee against the Order dated 20.1.2013 passed by the DCIT, Circle 9(1), New Delhi, raises the following grounds:- 1. On the facts and in law, the Learned Transf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n law the Ld. TPO, the Ld. AO and the Hon'ble DRP erred in using the data for the current year (i.e. financial year 2008-09) which was not contemporaneous and which was not available in the public domain at the time of preparing the TP documentation by the Appellant, thereby grossly misinterpreting the requirement of 'contemporaneous' data in the Rules to necessarily imply current year data, thereby breaching the principles of natural justice and 'impossibility of performance'. 9 On facts and in law, the Ld. TPO, Ld. AO and Hon'ble DRP erred in not granting the benefit of reduction/ variation of 5 percent from the arithmetic mean while determining the arm's length price to the Assessee as per the proviso to section 92C(2) of the Act. 10 On the facts and in the circumstances of the case, the Ld. AO erred in levying interest under section 234B of the Act. 11 Without prejudice to Ground 9, on the facts and in the circumstances of the case, the Ld. AO erred in computing the interest under section 234B of the Act at Rs. 3,160,505 instead of Rs. 1,973,382. 12 On the facts and in the circumstances of the case, the Ld. AO erred In initiating penalty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view the specific functions carried out by the assessee and discussed the same in his order dated 28.1.2013. On the functional analysis carried by him, he found that only one comparable used by the assessee is an appropriate comparable. The flaws were found even in the qualitative analysis carried by the assessee. The TPO, therefore, on the fresh search carried by him from the data base found certain comparables as reproduced in para 5 of the order, so as to use in the benchmarking process, particularly, when such comparables chosen by the TPO were found suitable, in light of the fact that all of such comparable had income in excess of 75% of the total income from services sector and had RPT below 25% of sales exceeding Rs. 1 crore. Accordingly, the arm s length price of the international transactions related to the provisions of the marketing support services was proposed to be recasted by taking the OP/TC at 27.13% in his show cause notice. The comments of the assessee alongwith detailed reply dated 11.1.2013 were duly considered and discussed in the order. After having detailed discussion and giving reasoning in choosing appropriate comparables, as also by rejecting assessee s c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ables by the TPO and selection of comparable based on fresh search, the DRP carried out discussions on each of the comparables and issued directions. All other issues raked up before it were also duly considered and findings and directions were recorded thereon. In view of such discussion and directions. The AO was required to complete the assessment and assessee s objections stood disposed of accordingly on 31.10.2013. 3.2 The AO computed assessable income at Rs. 2,93,86,610/- as against the returned income of Rs. 1,80,34,681/- by making the addition of Rs. 1,13,51,925/- and raised the tax demand accordingly. 3.3 The assessee s Counsel Shri Manoj Paradasani contends that the appellant has agitated entire addition of Rs. 1,13,51,925/- made on the basis of nine comparables post DRP s directions. The business descriptive of the assessee in fact is that the assessee is engaged in provision for marketing support services to its group companies. As part of its business the operations, the assessee is engaged in marketing research activities including the market based analysis, information of competitors, market characteristics, demand drivers etc. and the functions alternate by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... services. II. Orient Engineering Commercial Company Limited has been accepted as a comparable by the DRP. Even though this company has significantly different FAR profile. This being risk bearing agent cannot be compared with minimal risk service providers. Reliance has been placed on the Appellate Tribunal, Delhi judgments in the case of GAP International Sourcing (India) Pvt. Ltd. (ITA No. 5147/Del/2011 and 228/Del/2012) and also on the judgment by Appellate Tribunal, Bangalore in the case of Logica Private Limited IT(TP) A. No. 1129/Bang/2011. III. Killick Agencies Marketing Limited which has been also accepted, as DRP in its directions has in fact a company having different FAR profile, as this company has a risk bearing agent and risk bearing agent cannot be compared with minimal risk services provider. As has been elucidated in the case of the aforesaid comparables of Orient Engineering and Commercial Company Limited. IV. Global Procurement Consultants Limited The DRP has also accepted the Global Procurement Consultants Limited to be in the similar line of business as that of the assessee. Even though there are functional dissimilarity as have been stated in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th law by requiring the Assessee to show cause as to why the comparables chosen by the TPO be not adopted for making adjustments and those included by the assessee be not excluded as they were having functional dissimilarity with the nature of business of the assessee were not as per Rule 10B(2) of the IT Rules, 1962. The Appellate Tribunal shall also not correct the income / adjustments made by the Assessing Authority merely because the assessee is trying to put a new case before it and requires the Tribunal to do all that exercise afresh which infact is within the scope of powers of the Assessing Authority. In any event, if the matter is to be sent back, the whole issue of examining the assessee s claim be left upon the Assessing Authority so that each and every issue raked up by the assessee is examined and decision taken afresh in accordance with law. 5. We have heard parties with reference to material on record and case laws brought to our notice. Admittedly, the Assessing Authority has to follow the directions of the DRP and this mandate is contained u/s. 144C(10) of the Act. In this case the DRP has merely recorded a finding that Cyber Media (India) Online Ltd. is broadly ..... X X X X Extracts X X X X X X X X Extracts X X X X
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