9911796707
TMI Blog2018 (10) TMI 353X X X X Extracts X X X X X X X X Extracts X X X X ..... the prescription of section 245S(2) gets attracted, which requires consideration of the arguments of the assessee in the light of the substituted DTAA along with its Protocol to the facts of the instant case. Such new DTAA and the Protocol have not been considered by the Assessing Officer, who has simply gone by the Ruling rendered by the AAR. As such, we are of the considered opinion that the ends of justice would meet adequately if the impugned order on this score is set aside and the matter is remitted to the file of Assessing Officer. TPA - comparable selection criteria - benchmarking - margin calculation of the appellant company - Held that:- There is no dispute that the assessee sold its major business activity in the middle of FY. It is equally true that the assessee was incurring unutilised capacity in the form of fixed costs which were no longer recoverable through normal business activity. Meaning thereby, that there was no level playing field with the 51 comparables, in as much as, the comparables were not on the same platform with that of the assessee. In our considered opinion, the first appellate authority has given a very reasonable and justifiable finding in com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I), now known as Ericsson India Ltd. (EIL) 5. During the course of scrutiny assessment proceedings, the A.O observed that in the preceding assessment year i.e. 2001-02, the nature of the business of the assessee was the same and the contracts entered into by the assessee during the preceding years continued during this year as well. Following the findings of his predecessor for assessment year 2001-02 and for the same arguments and facts and also following the order of the AAR, New Delhi in the case of the assessee itself, remuneration received by the assessee was taken as fees for technical services within the meaning of DTAA with Sweden. 6. We find that in assessment year 2000-01, the dispute travelled upto the Tribunal and the Tribunal in ITA No. 893/DEL/2006 held as under: 10. We are not convinced with the contention put forth on behalf of the Revenue. A Protocol to the DTAA is, for all practical purposes, to be considered as its part and parcel. There is no question of resorting to it only if some clarity is wanting in the DTAA. In fact, a Protocol completes the DTAA. If a particular benefit is being conferred, expanded or reduced by the Protocol, which is absen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment year 2001-02 in ITA No. 894/DEL/2006. The relevant finding reads as under: We have passed a separate order in respect of the assessment year 2000-01. As the facts and circumstances of the instant appeal are admittedly mutatis mutandis similar to those of the immediately preceding year, we set aside the impugned order and remit the matter to the file of the Assessing Officer for deciding the issue of income earned from Indian concerns towards fee for technical services-and allocation of expenses in the light of our order given today for such preceding year. Needless to say, the assessee will be allowed a reasonable opportunity of being heard in such proceedings. 9. In the result, the appeal of the assessee is treated as allowed for statistical purpose. ITA No. 2018/DEL/2012 [Revenue s appeal] 10. Coming to the Revenue s appeal, the solitary grievance is that the ld. CIT(A) erred in deleting the additions of ₹ 1,27,93,154/- made by the Assessing Officer. 11. Briefly stated, the facts of the case are that the assessee restructured its business and closed down the installation/assembly business and transferred it to M/s EIL. As a part of this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... while calculating operating profit of the assessee. The assessee strongly objected to this proposition of the TPO by claiming that the profit on sale of assets was akin to income from operation of the business. The objection of the assessee did not find favour with the TPO who proceeded by computing the margin of the assessee by excluding the profit on sale of fixed assets. The margin of the assessee was recalculated at minus 1.57% and, accordingly, ₹ 1,27,93,154/- was added to the international transaction of the assessee. 15. Before the first appellate authority, the assessee strongly contended that six months operation of the assessee in installation and erection activity should be compared and bench marked. The assessee submitted the calculation of the results upto the sale of the business segment. It was further contended that since the assessee has sold the business in the middle of the F.Y., the assessee was incurring unutilized capacity in the form of fixed cost no longer recoverable through normal business activity. Therefore, it was pleaded that the excess costs towards unutilized capacity should be excluded from the total operating cost in order to bring the le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee. In our considered opinion, the first appellate authority has given a very reasonable and justifiable finding in coming to the conclusion that the appellant has earned OP/TC of 14%. The allegation of the ld. DR that the findings of the ld. CIT(A) is not based on any sound reasonin, is ill founded as the same is justified by the following: Particulars Amount (INR) Remarks Revenue 132,022,602 Profit on sale of fixed a s Assets Reimbursements received 14,060,821 Total Operating Revenue 146,083,423 Operating Expenses Cost of Installation s se r vices 965,086 salaries and other benefits 52,749,188 Admin expenses 52,960,605 Refer note 1 Depreciation 11,461,146 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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