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TMI Blog2017 (5) TMI 532X X X X Extracts X X X X X X X X Extracts X X X X ..... s below by a speaking order, we set aside the order’s of the assessing officer on this issue and decide the issue in favour of the assessee. Disallowance u/s.40a(ia) - Held that:- Upon careful consideration we find that Ld. DRP also noted that assessee has furnished evidences and particulars which the DRP wanted the assessing officer to examine and act upon. In the interest of justice we remit this issue again to the file of the assessing officer. Assessing officer is directed to give effect to the direction of the Ld. DRP after giving the assessee proper opportunity of being heard. Addition of interest - Advance given without any purpose for the business carried on by the assessee - Held that:- The deposit was made at the end of the financial year for entering into the agreement for rent for the accommodation to be used by the employee. There was slight delay in finalising the agreement, which can be considered to be reasonable. Hence we agree with the Ld. Counsel of the assessee that facts and circumstances do not warrant and addition of notional income on the deposit in the hand of the assessee. Accordingly we said aside the order’s of the parties below the decide the issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... round if need be. Apropos ground number 1, 2 and 3 3. Brief facts on this issue as under:- 3.1 BASF Coatings (India) Pvt. Ltd. hereinafter referred to as BCIL, (based at Bangalore) is a 55.4% owned subsidiary of BASF Coating, UK. The company is engaged in manufacturing of Coil Coating in India and supplying them to group companies and other countries as well. The international transactions of the assessee for the relevant previous year are as under:- S.No. International Transaction Amount (Rs.) Most Appropriate Method Used 1 Purchase of Raw Material 159,148,000 TNMM 2 Purchase of Finished Goods 46,276,000 TNMM 3 Payment of Royalty 21,772,000 TNMM 4 Payment of SAP Charges, etc. 7,830,000 TNMM Total ... 235;026,000 3.2 The assessee has undertaken ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... D I C India Ltd. Assessee 4.15% 5% 4 I C I India Ltd. Assessee 7.19% 54% 5 Organic Coatings Ltd. Assessee 1.10% 1% 6 Shalimar Paints Ltd. Assessee 4.00% 5% 7 Asian Paints Ltd. TPO 10.85% 12% 8 D I C Coatings Limited TPO 10.52% 10% 9 Goodlas Nerolac Paints Ltd. (Now Kansai Nerolac Paints) TPO 9.22% 11% Average 6.33% 12.22% 3.4 The comparables (including D I C Coatings India Ltd.) include 6 companies identified by the assessee itself. The TPO has proposed to adopt the average PLI (PBIT / Sales) of 9 comparable companies computed at 12.22% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Margin Calculation of I C I India Ltd. CPLI = PBIT / Revenue - without prejudice) ICI India Limtied March 2007 Total Revenue 954.32 PBT 140.11 Add: Interest 2.29 PBIT 142.4 PBIT / Revenue 14.92% This is after excluding the non-operating income and non-operating expenses as verified from the accounts. TPO has to verify this computation. (f) By adopting the PLI of ICI India Ltd. at 14.92% the arithmetic mean of PLI for 9 companies is arrived at 7.88% by the assessee which is prima facie found to be correct. Assessee's contends that adopting such modified arithmetic mean PLl of 9 companies @ 7.88%, the TP adjustment works out to ₹ 4,18,04,OOO/- only. TPO j AO is directed to verify the correctness of figures and recompute the TP adjustment/addition accordingly. (g) The TPO is correct in his approach as he has followed sub-rule (2) of Rule 10B and Sub Rule 10B (4). Hence, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I C I India Ltd 14.92% Asian Paints Industrial Ccatincs Ltd. 4.00% Asian Paints Ltd. 12.00% Berqer Paints India Ltd. 8.00% D I C India Ltd. 5.00% Kansai Nerolac Paints Ltd. 11.00% Orqanic Coatinqs Ltd. 1.00% Shalimar Paints Ltd. 5.00% DIC Coatinqs Limited 10.00% Airthmetic Mean 7.88% +/-5% Variation between ALP and international transaction. 7. Per contra Ld. D.R submitted that the she has reservations to the above computation, however she did not object to the proposition that the issue may be remitted to the file of the A.O to verify the veracity of the computations, now being submitted by the Ld. Counsel of the assessee. 8. Upon careful consideration we are of the considered opinion that the issue in this case needs to be remitted to the file of the A.O. The A.O shall consider the workings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that the tax audit report clearly mentions that no adjustment in view of the section 145A of the Income Tax Act is required. The authorities below have rejected the submissions without pointing out any reason as to why the above submissions of the assessee deserve to be rejected. It is settled law that even administrative order have to be consistent with the rules of natural justice. This position was reiterated by the Hon ble Apex Court in the case of Sahara Farms 300 ITR 403. Hence in view of the above submissions of the assessee which have not been controverted by the authorities below by a speaking order, we set aside the order s of the assessing officer on this issue and decide the issue in favour of the assessee. Apropos ground no. 6 13. The Ld. A.O has proposed to disallow ₹ 8,16,19,125/- u/s.40(a)(ia) of the I.T. in respect of the following payments: Rent Rs.1,09,71,000/- Professional Services ₹ 37,47,000/- Freight, Packing and Handling Charges Rs.3,35,67,000/- Royalty Rs.2,17,72,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o Mr. Rishabh Saksena and Mrs. Anu Saksena. As assessee has not furnished the details of the deposit/advance, the AO has treated the same as advance given without any purpose for the business carried on by the assessee, and computed 10% of such advance, as interest and added an amount of ₹ 2,50,000/- as income. 17. Before the DRP, the assessee has contended that the amount of ₹ 25 lacs is given to the above 2 persons as deposit as per the Lease Licence Agreement of the contract with them. It was explained that they have taken a premises on rent from Mr. Rishabh Saksena and Mrs. Anu Saksena as per the Lease and Licence Agreement (with them) dated 24.04.2007 and such premises taken by the assessee company is for residence of Chief Executive Dr. D. Ramkurnar, employee of the company and the perquisite value of such accommodation provided to him was included in his salary for the purpose of TDS u/s.192.and as the advance was given in the course of business carried on by the assessee addition made by the AD may be deleted. Copy of lease agreement and salary particulars of Mr. Ramkumar were filed. 18. The Ld. DRP directed as under:- The DRP has considered the submi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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