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TMI Blog2017 (12) TMI 997X X X X Extracts X X X X X X X X Extracts X X X X ..... Act') qua the assessment year 2008-09 on the grounds inter alia that :- "TRANSFER PRICING MATTERS Ground 1: Erroneous rejection of the transfer pricing analysis On the facts and in the circumstances of the case and in law, the Ld. Assessing Officer ('AO'), the Ld. Transfer Pricing Officer (TPO') pursuant to the directions of the Ld. Dispute Resolution Panel ('DRP') erred in rejecting the benchmarking approach adopted by the appellant in the transfer pricing study and thereby making a transfer pricing adjustment of Rs. 9,82,34,197 to the international transaction of export of components from Plant I and Rs. 17,098,544 to the transaction of provision of engineering design services from Plant II of the appellant by holding that these international transactions do not satisfy the arm's length principle envisaged under the Income-tax Act, 1961 ('the Act'). Ground 2: Rejection of economic adjustments conducted by the appellant to compute the operating profit from the international transaction of export of components On the facts and in the circumstances of the case and in law, the Ld. DRP/AO/TPO has erred in rejecting the economic adjustments conducted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vices procured by the Associated Enterprises from Onward Technologies was submitted by the appellant; b) Considering Rolta India Limited as comparable company; though the same is not functionally comparable. Ground 7: Denying the use of multiple year data to the appellant On the facts and in the circumstances of the case, the Ld DRP/AO/TPO has erred in considering the single year data for the com parables i.e. data for Financial Year ('FY') 2007-08 only and disregarding multiple year data which was considered by the appellant in accordance with the provisions of Rule 10B (4) of the Rules. While doing so, the Ld. DRP/AO/TPO erred in appreciating the fact that the appellant has computed arm's length price for the transaction of provision of engineering design services on the basis of contemporaneous and multiple year data of com parables available at the time of conducting the Transfer Pricing Study and based on the same had offered a suo-moto adjustment of Rs. 96,09,029 as income in its return of income, thereby clearly complying with the proviso to Rule 108 (4) of the Rules. Ground 8: Ignoring the fact that the appellant is entitled to tax holiday under Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preciation adopted by the respondent vis-a-vis comparables) for computation of operating profit from international transaction of export of components without appreciating that the said rationale is' squarely covered under several judicial precedence from Hon'ble Tribunal; Grounds pertaining to international transaction of export of equipment from Plant II 1.3 Incorrect consideration of B E M L Limited as a comparable company without appreciating the fact that the same is a public sector undertaking whereas, the selection of public sector undertakings is incorrect, the said rationale is squarely covered under several judicial precedence from Hon'ble Tribunal; and 1.4 Rejection of adjustment for marketing function which was absent in case of the assessee vis-a-vis the comparables as conducted by the assessee in its TP documentation." ITA NO.6359/DEL/2012 (AY 2008-09) ASSESSEE'S APPEAL 5. Briefly stated the facts necessary for adjudication of the controversy at hand are : M/s. JCB Manufacturing Pvt. Limited (JCBMPL), the taxpayer has been merged with M/s. JCB India Limited (JCBIL) w.e.f. 01.04.2009 as approved by Hon'ble High Court of Bombay vide order date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... single year data as against PLI 13.22% qua international transaction with Associated Enterprise (AE) in the form of supply of design engineering services. Out of four comparables, TPO rejected Onward Technologies Limited and proposed to introduce Rolta India Limited having average of 28.52%. After making detailed analysis of the objections raised by the taxpayer, TPO finally selected four comparables having OP/TC at 24.07% which are as under :- Sr.No. Name of the Company PLI - OP/TC 1. Tata Technologies Ltd. 18.63% 2. Infotech Enterprise -(Engineering, Manufacturing, Industries Products Segment) 15.79% 3. KLG Systel Ltd. (Life Cycle Solutions Segment) 23.48% 4. Rotla India Ltd. 38.38% Mean 24.07% 8. On the basis of aforesaid comparables and by calculating the operating Revenues, operating expenses and operating profit, TPO taken PLI of the comparables at 24.07% as against PLI of taxpayer at (-) 5.86% and proceeded to propose the arm's length as under:- Operating Cost of EDC Rs.7,15,86,142 Mean of the OPTC of the comparables 29.93% Arm's Length price of the international transaction (7,15,86,142 X 129.93/100 = Rs. 9,30,11,874 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansactions of equipment of Plant - II for rejection of economic adjustment conducted by the taxpayer on account of unabsorbed overheads and rejection of accounting adjustment conducted by the taxpayer and also challenged incorrect consideration of BEML Limited as a comparable company and also challenged the rejection of adjustment for marketing function which was not there in the case of the taxpayer vis-à-vis the comparables. 13. We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case. 14. The taxpayer moved an application for admission of additional grounds in ITA No.6359/Del/2012 for AY 2008-09 and in Cross Objection No.284/Del/2014 for Assessment Year 2009- 10 for the reason that the aforesaid grounds are legal and can be adjudicated on the basis of material already available on record. The additional grounds raised by the assessee in both the AYs 2008-09 and 2009-10 are as under :- ITA NO.6359/DEL/2012 (AY 2008-09) "1. That the Draft Assessment order dated 21.12.2011 and Final Assessment order date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 21.12.2011 and assessment order dated 25.10.2012 passed in JCBML merged with JCBIL, the taxpayer in this case, was not in existence and drew our attention to assessment order dated 25.10.2012 for AY 2008-09 in case of JCBMPL merged with JCBIL w.e.f. 01.04.2009 pursuant to the scheme of amalgamation as approved by Hon'ble High Court of Bombay vide its order dated 05.02.2010 and vide orders dated 05.02.2010, 26.02.2010 and 26.02.2010 passed by Hon'ble High Court of Delhi. This fact has been duly recorded by ld. DRP in its order dated 21.09.2012, available at page 52 of the paper book. So, on the date of completion of assessment, in case JCBMPL merged with JCBIL w.e.f. 01.04.2009, it was not in existence and was a non-entity. So, we are of the considered view that assessment order itself is a nullity and is not sustainable in the eyes of law. 17. Similarly, in case of JCBMPL for AY 2009-10 qua the appeal filed by the Revenue as well as cross objection filed by the taxpayer, assessment order was passed on 29.01.2014 whereas JCBMPL ceases to be in existence w.e.f. 01.04.2009 as per order passed by Hon'ble High Court of Bombay dated05.02.2010 and order passed by Hon'ble Delhi High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X
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