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TMI Blog2016 (4) TMI 356X X X X Extracts X X X X X X X X Extracts X X X X ..... Adv ORDER PER SUCHITRA KAMBLE, JM This appeal is filed by the Revenue and the Cross-Objection is filed by the assessee against the order dated 5/2/2013 passed by the CIT (A) s XX, New Delhi. 2. The grounds of appeal of the revenue are as under:- 1. On the facts and in the circumstances of the case and in law the Ld. CIT (A) has erred in deleting the adjustment of ₹ 1,21,84,936/- made by the A.O on account of adjustment of Arms Length Price. 3. The ground of appeal of the (Cross-Objection) assessee are as under:- 1. The order of the Ld. CIT(A)/TPO Assessing Officer in so far as it is against the Respondent, is opposed to law, weight of evidence, natural justice, probabilities, facts and circumstances of the respondent s case. 2. The respondent prays leave of the Tribunal to raise the following questions in the cross objections which are pure questions of law and in accordance with the ratio of the apex court in National Thermal Power Corporation 229 ITR Page 383 has raised the same for adjudication for the advancement of substantial cause of justice. a. The order of the assessment is bad in law as the mandatory conditions to invoke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee at the time of preparation of Transfer Pricing ( TP ) documentation as per the requirement of the Act. 8. Confirming the rejection of transfer pricing documentation by transfer pricing officer ( TPO ) 9. Confirming the application of arbitrary filters by TPO and not adjudicating on unjust rejection of certain filters by TPO applied by the assessee for selection/rejection of companies; 10. Approving use of information gathered by the TPO by exercising power u/s 133(6) of the Act without appreciating that the information is not available in public domain, which is contrary to the principles of natural justice; 11. Rejecting certain functionally comparable companies accepted by the assessee and accepting certain non-comparable companies selected by the TPO without giving any logical reasons; 12. Accepting certain companies engaged in performing Knowledge Process Outsourcing ( KPO ) functions otherwise not comparable, as comparable to the assessee engaged in providing medical transcription services which are in the nature of back-end IT enabled services; 13. Accepting certain companies with abnormally high margins and certain companies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, 1961, as prevailing prior to October 1, 2009. It is submitted that the said ground/issue is squarely covered in favour of the assessee by the decision of this Hon ble Tribunal for the assessment year 2006-07. The relevant observations of ITAT, are inter alia as under: 5 per cent standard deduction has been denied on the ground that proviso to Section 92C (2) of the Act has been amended though the said Amendment has been made by Finance (No.2) Act, 2009 with effect from 1/10/2009. Prior to this amendment as per proviso to Section 92C (2) the assessee was eligible for 5 percent of adjustments. Since the amendment has been made effective form 1/10/2009 it is held that the assessee will be eligible for 5 percent of adjustment while computing arm s length price. The Assessing Officer is directed accordingly. Thus, following the principle of consistency, the Applicant shall be allowed the benefit of 5 % standard deduction while determining the ALP of the international transactions. It is further submitted that the aforesaid additional grounds of appeal is purely legal in nature and does not involve any fresh investigation into facts, and the Applicant by way of thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Financial Year 2008 Segmental Sales in Crores 1.18 3.75 11.40 17.85% CAGR of the Company for 2005 to 2007 147% On the basis of the above table it was submitted that, the Company grew with a Compounded Annual Growth Rate ( CAGR ) of 147% for 3 years, which is evidently above the industry average. Hence on the basis of the evidence as provided above, it was submitted that Mold-Tek ought to be rejected as a comparable company due to the consistently abnormal profits earned by the Company. Further the assessee stated that company was involved in merger and acquisition activities during the year under consideration. 9. The CIT(A) after considering the submission of the assessee, the order of the TPO and the annual report of the company, came to the conclusion that there was merit in the claim of the assessee that the company had mergers and acquisition activities during the year. He also pointed out that there were several other irregularities in the financial statements of M/s Mold Tek Technologies Ltd. which had been con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d-Tek Technologies Ltd. as the scheme of arrangement involving amalgamation between Tekmen Tool Pvt. Ltd. and Mold-Tek Technologies Ltd. and demerger between Mold-Tek Technologies Ltd. simultaneously was sanctioned by the Hon ble AP High Court by 15th July, 2008 with the appointed date for amalgamation and de-merger being 1st October, 2007 and 1st April, 2007 respectively. It is also pertinent to note that while working out the operating margin of the said company, provision for derivate loss of ₹ 6.43crores made by Mold-Tek Technologies Ltd. was excluded by the A.O. treating the same as non-operating expenses whereas in the case of Rushabh Diamond (supra), it was held by the Division Bench of this Tribunal that the gain or loss arising from the forward contract entered into for the purpose of foreign currency exposure on the export and import has to be taken into consideration while computing the operating profit. 11. The Ld. AR further relied upon the case of TATA Consultancy in respect of the ground of assessee in Cross-Objection related to invocation of jurisdiction u/s 92CA, the said judgment by the ITAT Mumbai in Para 26 has given a finding that it was the statuto ..... X X X X Extracts X X X X X X X X Extracts X X X X
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