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TMI Blog2016 (5) TMI 1300X X X X Extracts X X X X X X X X Extracts X X X X ..... regard to capacity utilization and customs duty adjustment without issuing any notice. This Tribunal is of the considered opinion that there was a clear violation of the principles of natural justice. Therefore, the matter needs to be reconsidered by the DRP. The direction of the DRP shall be specific and clear so that the Assessing Officer can implement the same without any intervention either by the TPO or any authority. Thus entire issue is remitted back to the file of the Assessing Officer. The Assessing Officer shall refer the matter once again to the DRP and the DRP shall pass a clear and specific order, if necessary, after calling for a remand report from the TPO. - I.T.A.No.852/Mds/2014 - - - Dated:- 19-5-2016 - SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER Appellant by : Shri S.P.Chidambaram, Advocate Respondent by : Shri Jasdeep Singh, CIT O R D E R PER N.R.S.GANESAN, JUDICIAL MEMBER This appeal of the assessee is directed against the assessment order dated 24.1.2014 consequent to the direction of the Dispute Resolution Panel dated 20.12.2013 and pertains to assessment year 2009-10. 2. Shri S. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y enhancement notice. Therefore, the assessee has no occasion to put forward its objection before the DRP. According to the ld. Counsel, capacity utilization and customs duty adjustment without issuing any notice to the assessee cannot be made by the DRP. Therefore, according to the ld. Counsel, the matter may be remitted back to the file of the DRP for reconsideration. 3. On the contrary, Shri Jasdeep Singh, the ld. Departmental Representative submitted that the DRP by order dated 20.12.2013 directed the Assessing Officer to apply TNMM with adjustment on account of working capital and to exclude loss or gain on account of foreign exchange fluctuation from opening profit. Subsequently, the TPO vide his order dated 22.1.2014 determined the adjustment at `10,89,83,390/- instead of `3,53,11,980/- originally proposed. Accordingly, a sum of ₹ 10,89,83,390/- was added to the total income of the assessee in view of the subsequent order of the TPO. Similarly, the fees paid to ROC and the difference of ₹ 2,28,8,217/- between the total turnover as per the return filed under the Value Added Tax and the total turnover as per the Profit Loss Account was also added as suppressio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd it would be necessary to take into account the cost of components imported alongwith the custom duty paid thereon for the purpose of comparison with the corresponding indigenous components consumed by the comparables. Moreover, the local levies such as sales tax etc. are also required to be taken into account for such comparison. It is also pertinent to note here that if the taxpayer company has purchased the imported components after payment of custom duty at a higher price than the indigenous components purchased by the comparables, this decision must have been taken by it consciously taking into account all the commercial considerations including the obvious benefits of better quality which is bound to reflect or translate into a higher selling price of the product. This leaves hardly any scope for adjustment to the profit margins of the comparables on this count. The adjustment on account of custom duty payment is not allowed. 20. The assessee wants that loss on account of forex fluctuations be excluded from operating income. The TPO has accepted that forex fluctuation loss is due to treasury management functions of the assesee, but still. the TPO appears to be agains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer shall in conformity with the direction, complete the assessment without providing any further opportunity of being heard to the assessee. Therefore, the scheme of the international transaction under the Income-tax Act, enables the Assessing Officer to complete the assessment in conformity with the direction of the DRP. Since an opportunity was given before the DRP, Section 144C(13) specifically provides that no further opportunity shall be given to the assessee. In this case, the DRP directed the TPO to apply TNMM with adjustment on account of working capital. On the basis of this direction, the TPO has passed another order dated 22.1.2014 and subsequently, the Assessing Officer gave effect to the order of the TPO dated 22.1.2014. When the mandate of sec. 144C(13) is to pass an assessment order in conformity with the direction of the DRP, the TPO has no role to pass a subsequent order after the direction given by the DRP. In this case, the Assessing Officer has not passed the assessment order in conformity with the direction of the DRP. In fact, the direction of the DRP was to the TPO. Therefore, the assessee has no occasion to file its objection to the subsequent order of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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