9911796707
TMI Blog2012 (3) TMI 577X X X X Extracts X X X X X X X X Extracts X X X X ..... evel margins of the comparable companies are being considered. 5. On the facts and circumstances of the case and in law, the Ld.CIT(A) has erred in not considering segmental accounts of healthcare division in Advanced Micronics Device Ltd., more so when the margin were recomputed afresh. 6. On the facts and circumstances of the case and in law, the order of the CIT(A) has erred in quashing the applicability of penalty u/s 271(1)(c)/271G of the Act. 7. The appellant craves to leave, to add, alter or amend any ground of appeal raised above at the time of the hearing. 2. Adverting first to ground no.3 in the appeal, facts, in brief, as per relevant orders are that return declaring loss of ₹ 28,17,554/- filed on 31.10.2005 by the assessee, trading in dental material equipments, after being processed on 30.08.2006 u/s 143(1) of the Income-tax Act, 1961 (hereinafter referred to as the Act), was selected for scrutiny with the service of notice u/s 143(2) of the Act. Subsequently, the Assessing Officer (A.O. in short) noticed that the assessee company, a wholly owned subsidiary of Dentsply Industries, USA, entered into following international transactions with its AE:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uded that the international transactions of the assessee in respect of import of finished goods and raw material entered with its associated enterprises are not at arm s length. The assessee in arm s length circumstances would earn a profit of ₹ 1,39,13,588/- whereas a loss of ₹ 89,08,166/- is being posted. The difference between loss reported by the assessee and arm s length profit calculated on the basis of comparables as above would be ₹ 2,28,21,754/-. The Arm s Length Value of the international transaction in respect of import of finished goods, raw material and payment of interest on External Commercial Borrowing is as above is accordingly determined as under:- [In Rs.] S No. International Transaction Book Value Difference loaded Arm s Length price Difference (%) 1 Import of raw materials and consumables 1630684 365306 1265378 28.87 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the transactional differences than are the prices of the product. The search criteria based on functions performed, assets employed and risk assumed based of two comparable which were initially selected by the TPO has been retained as final comparable. 11. On the basis of the final selection of two comparables, the mean of their operating profit earned on total operating cost based on data for the financial year 2004-05 will be compared with that of the assessee company to determine the arm s length price in regards to international transactions undertaken by the assessee for the assessment year 2005-06. During the course of appellate proceedings, it was also found that, the TPO has calculated the net profit margin by taking OP/TC as the profit level indicator by accepting TNMM as the most appropriate method. Since neither TPO nor the appellant had any grounds of disputes, regarding PLI for the trading function and the use of the appellant as the tested party, therefore, I hold that, OP/TC should be used as the appropriate PLI and TNMM as the most appropriate method. 12. Accordingly the appellant was called to provide the OP/TC reliable figures for the current year of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hence, the question of mens rea does not arises. The Assessing Officer has mechanically applied the penalty proceedings with any reasoning. The same views were taken in the judgment of Hon ble Supreme Court in (Reliance Petroproducts Private Ltd.) Considering the facts of case as stated in proceeding paragraphs and as stated above there is no case for penalty. 4. The Revenue is now in appeal before us against the aforesaid findings of the ld. CIT(A). The ld. DR while inviting our attention to ground no.3 in the appeal, contended that the ld. CIT(A) was not justified in admitting additional evidence in contravention of Rule 46A of the IT Rules,1962 ,without allowing any opportunity to the TPO/AO in respect of data relating to comparables and that of the assessee ,considered by the ld. CIT(A). The ld. DR vehemently argued that without allowing any opportunity to the TPO/AO, the ld. CIT(A) was not justified in deleting the addition. The ld. AR on behalf of the assessee did not oppose these submissions of the ld. DR and to a query by the Bench, the ld. AR admitted that the ld. CIT(A) considered the additional material without allowing any opportunity to the Assessing Officer/TPO .A ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
