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TMI Blog2017 (2) TMI 809X X X X Extracts X X X X X X X X Extracts X X X X ..... an earlier year because for the purpose of computing the ALP, operating profit margin over the turnover has to be worked out and since the turnover of the present year is not inclusive of turnover of earlier year for which the exchange fluctuation gain is arising, such gain also cannot be taken into account for computing the operating profit percentage of the present year in order to finalise ALP and since these details are not available on record as to whether the foreign exchange fluctuation gain in the present case is in respect of turnover of the present year or of an earlier year, we restore the matter back to the file of the AO/TPO for fresh decision Exclusion of one comparable company i.e. Sat Investeck Ltd - Held that:- This issue should be restored back to the file of TPO for fresh decision after examining the RPT percentage of this company because, as per the annual report of this company available in the paper book, the RPT percentage of this company is much higher than the RPT percentage being accepted by the Tribunal i.e. 15% but there is no finding of any of the authorities below on this aspect. Hence, on his aspect, we set aside the order of ld. CT (A) and restor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e industry in which the assessee is operating. 6. The CIT(A) erred in holding that Sat Investeck Ltd. cannot be considered as a comparable stating that this company earned abnormal profits without mentioning any peculiar economic circumstances which resulted in so called high/abnormal profits. 7. The CIT(A) erred in holding that arm's length price adjustment is to be made only after allowing +/-5%from the arithmetic mean price as per the proviso to sec. 92C(2) even when the price charged by the assessee falls beyond +/- 5% from the arithmetical mean price. 8. The CIT(A) erred in holding that arm's length price adjustment is to be made only after allowing+/-5% from the arithmetic mean price as per the proviso to sec. 92C(2) even when said proviso is amended to clarify the position as it was. 9. The CIT(A) erred in holding that the amended proviso to sec. 92C(2) is not applicable to the AY: 2004-05 as the amendment is made effective from 01-01-2009 even though it is clarificatory amendment as evidenced by Memorandum to the Finance Bill (2) of 2009. 10. For these and other grounds that may be urged at the time of hearing, it is prayed that the order of the CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elated party was about ₹ 332 lacs but since there is no finding on this aspect by any of the authorities below, the matter may be restored back to the file of the AO/TPO for fresh decision after examining this aspect and if it is found that RPT percentage of this company is more than 15%, then this comparable company has to be excluded by applying RPT filter and in that situation, no other aspect needs to be examined. 7. Regarding the remaining grounds of the revenue i.e ...... ground no. 6 to 9, he fairly conceded that these grounds of the revenue should be allowed in view of subsequent retrospective amendment in Sec. 92C of the IT Act, 1961. 8. We have considered the rival submissions. Regarding the first issue raised by the revenue as per ground no. 2, 3 4 i.e. Direction of the ld. CIT (A) to include foreign exchange gain as part of operating revenue, we feel it proper that this matter should go back to the file of the ld. CIT (A) for a fresh decision after examining this aspect as to whether such foreign exchange gain is in respect of turnover of the present year or of an earlier year because in our considered opinion, the foreign exchange gain is no doubt an oper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowed for statistical purposes. 10. Regarding third issue i.e. 5% standard deduction allowed by ld. CIT (A), it was fairly conceded by the ld. AR of the assessee that this issue has to be decided in favour of the revenue and against the assessee in view of subsequent amendment in the provisions of sec. 92C of the IT Act, 1961. Accordingly, we decide this issue in favour of the revenue and against the assessee and accordingly, ground no. 7 to 9 of the revenue's appeal are allowed. 11. In the result, the appeal of the revenue stands allowed in the terms indicated above. 12. Now, we take up the CO of the assessee for AY: 2004-05. 13. The grounds raised by the assessee in its CO. are as under; 1. The order of the Commissioner of Income-tax (Appeals) [UCIT (A)'] in so far as it relates to the following ground is opposed to law and facts of the case. 2. The learned, CIT (A) and the learned AO has erred in law in relying on the order under section 92CA of the Act passed by the learned TPO, which in itself is bad in law and on facts as the same was passed on incorrect understanding of the business model of the Cross-objector and is therefore liable to be quash ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 92C(2A) has explained that when the variation between the arithmetical mean referred to in the proviso to sec. 92C(2) and the price at which international transaction has actually been undertaken exceeds five percent of the arithmetical mean, then, the assessee shall not be entitled to exercise the option as referred to in the proviso, which amendment has been made with retrospective effect from April 1, 2002, Further, newly added section 92C(B) has limited the powers of the AO to assess or reassess or pass an order enhancing the assessment or reducing a refund already made for any assessment year the proceedings of which have been completed before the 1st day of October, 2009. 10. Pursuant to the amendment in the provisions of section 92C by inserting the new sub-sections 2A and 2B. Your cross objector was under the mistaken belief that the newly inserted sub-section 2B of section 92C shall grandfather the subject case for AY: 2004-05 and, hence by virtue of sub-sections 2B, the newly inserted subsection 2A of section 92C shall not be applicable in the subject case of your cross objector. However, upon discussion with the Counsel representing the merit mater before you ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Finance Act 2012, it cannot be said that the assessee was not aware of the provisions of its implications and hence, in our considered opinion, the delay in filing the cross objection by the assessee cannot be condoned because there is no reasonable explanation of the assessee regarding such huge delay particularly, the delay of 951 days after pronouncement of the Special Bench order of the Tribunal on 30-04-2013. Hence, we do not condone the delay and therefore, the cross objection of the assessee is liable to be dismissed as un-admitted. We order accordingly. 17. In the result, the cross objection filed by the assessee is dismissed. 18. Now, we take up the appeal of the revenue for the assessment year 2005-06 in ITA No. 37(Bang)/2011 and the grounds raised by the revenue in this appeal are as under; 1. The order of the ld. CIT (A) is opposed to law and facts of the case. 2. The ld. CIT (A) erred in law in directing the AO to exclude telecommunication expenses of Rs. l3,15,981/- and travel expenses o Rs. l1,97,247/- incurred in foreign currency for delivery of software from total turnover also while such exclusion is necessary only to arrive at export turnover also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (supra) wherein it was held that the total turnover is sum total of domestic turnover and export turnover and therefore, if an amount is reduced from export turnover then the total turnover also goes down automatically by the same amount. Respectfully following this judgment, we decline to interfere with the order of the ld. CIT (A) on this aspect. Accordingly, ground no. 2 of the revenue is rejected. 22. Regarding ground no. 3 to 5, we find that this issue was restored back by us to the file of the A.O./T.P.O. for fresh decision as per para-8 above as per which Grounds 2 to 4 in that were decided. On the same line, in the present year also, we set aside the order of the ld. CIT (A) on this issue and restore the matter back to the file of the A.O./TPO for fresh decision with direction as given by us in assessment year : 2004-05. Accordingly ground no. 3 to 5 of the revenue's appeal for AY: 2005-06 are allowed for statistical purposes. 23. Regarding ground no. 6 to 8 in the present year, we find that in assessment year 2004-05, we have decided this issue in favour of revenue and against the assessee as per para-10 and accordingly, in. the present year also, this issue is d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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