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TMI Blog2017 (6) TMI 1044X X X X Extracts X X X X X X X X Extracts X X X X ..... excess provisions in the subsequent year Addition on delayed payments of Employees contribution to PF and ESI - payment before due date - Held that:- We are of the opinion that the grievance of the assessee pertaining to employee’s contribution towards PF & ESI before due date as prescribed under the Act is squarely covered by the judgment of jurisdictional High Court in the case of CIT v. MIs. Industrial Security & Intelligence India Pvt. Ltd. [2015 (7) TMI 1063 - MADRAS HIGH COURT]. In view of the above judgement of jurisdictional High Court, this ground raised by the assessee is allowed subject to verification by AO. - I.T.A.Nos.617/Mds./2015, And 572/Mds./2016 - - - Dated:- 26-4-2017 - SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER, AND Shri Duvvuru RL Reddy, JUDICIAL MEMBER For The Appellant : Mr.Kapil Hirani,C.A Mr.Dapar Kirpalani,Advocate For The Respondent : Mr.Pathalavath Peerya, CIT D.R ORDER PER CHANDRA POOJARI, ACCOUNTANT MEMBER The appeal of the assessee for assessment year 2010-11 is directed against the direction of the Dispute Resolution Panel (DRP),Chennai dated 19.11.2014 and the other appeal of assessee for assessment year 2011-12 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ic fact that the Appellant is merely a trader and as such does not add much value to the products being sold. Thus using ratio of Gross Profit / Value Added Expenses and comparing it with other comparables is not applicable to the facts and circumstances of the case as the Appellant does not do any value addition to the products being traded by it. The Id. TPO further while calculating the Berry Ratio at para 15 of TPO order, not considered the figure of Other Income of ₹ 2,34,17,434/- in the total of Operating Income despite including it in the list of Operating Incomes. The figure of other income has been duly added in the calculations for AY 2011-12 which has identical facts. The Ld. TPO selected comparable companies to compare the Berry Ratio as the said comparable companies, which are said to be engaged in similar businesses. The comparables selected by the TPO are as under: Adtech Systems Ltd. - Engaged in business of EAS solutions, Display Secure System, CCTV/IP System, Access Control System, Fire Detection System etc. Alert Fire Protection Systems Pvt. Ltd. - The comparable company has been in business for 17 years whereas the Appellant has effectively comme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Berry Ratio is the appropriate method for the comparability study in case of the assessee. It has been submitted that, the assessee for the relevant year apart from trading has done substantial value addition services. He pleaded to reject CUP as MAM and to adopt Berry Ratio as PLI. 5. We have heard both the parties and perused the material on record. The assessee is a trader in UPS system and accessories and also providing sales after services. There is no dispute that the assessee has not made any value addition to the UPS goods procured from its A.E. The UPS were sold in Indian market as it is procured from the AE. The TPO has accepted the TP study that Resale Price Method (RPM) is one of the accepted methods out of five methods in Transfer Pricing (TP). Even after suggesting that one, he is not ready to accept that method. The Resale Price Method (RPM) is a method to compare the gross profit of the assessee with the gross profit of the comparable companies and to compute the ALP. The RPM begins with the price at which a product that has been purchased from A.E as resold to an independent enterprises. This price is then reduced by an appropriate gross profit, that this price ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ext ground is with regard to disallowing the provisions for warranty by AO/TRP/DRP. 7.1 The facts of the issue are that the assessee has claimed provisions of warranty of ₹ 1,67,33,228/-. The ld.A.R relied on the judgement of Supreme Court in the case of Rotork Controls India (P) Ltd in (2009) 314 ITR 62 has held the conditions required to allow a provisions as expenses of which the relevant part is reproduced as under:- The principle which emerges is that if the historical trend indicates that a large number of sophisticated goods were being manufactured in the past and if the facts established show that defects existed in some of the items manufactured and sold, then the provisions made for warranty in respect of the army of such sophisticated goods would be entitled to deduction from the gross receipts u/s.37. It would all depend on the data systematically maintained by the assessee. Before lower authorities, when the assessee asked about the historical trends and the basis for calculation for provisions for warranty expenses, filed a letter dated 30.03.2015 produced the computational basis for claiming warranty expenses. It is found that the assessee has not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT v. MIs. Industrial Security Intelligence India Pvt. Ltd. in TC(Appeal) Nos.585 586 of 2015 dated 24.7.2015 and held as under:- 5. We find that the Tribunal has rightly relied on the decision of the Supreme Court in the case of CIT v. Alom Extrusions Ltd. reported in 319 ITR 386, whereby, the Supreme Court held that omission of second proviso to Section 43B and amendment to first proviso by Finance Act, 2003 are curative and are effective retrospectively, i.e., with effect from 1.4.1988 i.e., the date of insertion of first proviso. The Delhi High Court in the case of CIT v. Amil Ltd. reported in 321 ITR 508 held that if the assessee had deposited employee s contribution towards Provident Fund and ESI after due as prescribed under the relevant Act, but before the due date of filing of return under the Income Tax Act, no disallowance could be made in view of the provisions of Section 43B as amended by Finance Act, 2003. 6. In the present case, the assessee had remitted the employees contribution beyond the due date for payment, but within the due date for filing the return of income. Hence, following the above-said decisions, we find no reason to differ with the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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