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TMI Blog2017 (1) TMI 454X X X X Extracts X X X X X X X X Extracts X X X X ..... mpleted the assessment u/s. 143(3) of the Act, on 07. 02. 2014, determining its income at Rs. 3. 36 lakhs. 2. First effective ground of appeal deals with adjustment of Rs. 3. 06 lakhs. During the assessment proceedings, the AO found that the assessee had entered into international transactions(IT. s)with its Associated Enterprises (AE. s) worth Rs. 12. 54 lakhs. He directed the assessee to furnish the details of transactions and the method adopted for determining the Arm's Length Price (ALP). The assessee stated that it had applied Cost Plus Method (CPM) for determining the ALP on the basis of the agreement entered into with the AE. s. , that the basis adapted as per the agreement was the markup of 23. 45% on the salary and rent expenses i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by it with them were squarely covered under the definition of IT within the meaning of provisions of section 92 of the Act. 2. 1. As regards the proposed adjustment and working of CPM, the AO held that the assessee had not submitted any explanation as to why other than salary and rent had not been included in the invoices raised and the markup had been charged thereon, that the assessee was into service sectors and was providing software related services to the AE's involving lead restrictive utilities, that the method followed by the assessee was not in accordance with the provisions of the Act, that the entire cost was required to be taken into consideration for applying markup under the CPM, that the assessee had failed to do so, that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at it had merely submitted a copy of certificate issued by the chartered accountant of the AE, that the certificate was not supported by any documentary evidence like transfer of shares, that the argument was not acceptable, that even during the stays of appellate proceedings the assessee had not filed any documentary evidence, that the returns filed in India by one of the directors prove that there was no change in the shareholding pattern of the foreign entities, that the audit report filed by the assessee also mentioned that the assessee had entered into transaction with its AE's namely Star and DTL, that assessee had not filed any certificate/confirmation from the auditors who had signed Form number 3 CEB stating that the above-mentione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... along with its return of income, that it had claimed that IT. s were entered into with its AE. s, that later on it claimed that Star and DTL were not its AE. s, that no documentary evidence was produced before the revenue authorities in support of its claim, that it did not file any confirmation or certificate from the auditors about the incorrectness of the audit report especially about the existence of AE. s. Therefore, we are of the opinion that order of the FAA does not suffer from any legal infirmity. Confirming the same, we decide the first ground of appeal against the assessee. With regard to the markup of 23. 45%, we find that the assessee had included only two of the items of the profit and loss account i. e. salary and the rent, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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