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TMI Blog2019 (8) TMI 348X X X X Extracts X X X X X X X X Extracts X X X X ..... it was held that aggregation of transactions undertaken by it were at arm's length price with the margins of comparables finally selected. There is no dispute about selection of comparables. Allowability of expenses which was disallowed in earlier year for non deposit of TDS - since TDS was deposited in current year - HELD THAT:- In the year under consideration, the said TDS was deposited and the assessee claimed the said expenditure as allowable in its hands. However, the issue of deductibility of TDS in assessment year 2011-12 has been set aside by the Tribunal to the Assessing Officer and consequent to its being settled, in case no disallowance is made in assessment year 2011-12, then the issue raised by way of ground of appeal No.6 would become academic; otherwise, the same needs to be allowed in the hands of assessee. - ITA No.136/PUN/2018 - - - Dated:- 31-7-2019 - Ms. Sushma Chowla, JM And Shri D. Karunakara Rao, AM For the Assessee : Shri Nikhil Pathak For the Revenue : Shri A.K. Modi, CIT ORDER PER SUSHMA CHOWLA, JM: The appeal filed by assessee is against th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rdingly, by considering the aggregation approach followed by the appellant company, no addition was warranted at all. 4] Without prejudice to above grounds, the learned A.O. / DRP erred in selecting F.K. Bagasrawala Exports Pvt. Ltd. as comparable company to benchmark the international transaction of import of straws for trading without appreciating that the said company was not comparable with the appellant company on account of the FAR analysis and hence, the addition made of ₹ 3,50,87,856/- in respect of the transaction of import of Straws should be deleted. 5] The learned A.O. / DRP erred in adopting Internal Transactional Net Margin Method ('TNMM') to determine the ALP of the international transaction of export of packaging material and thereby erred in making an addition of ₹ 73,82,64,577/- in the hands of the appellant company without appreciating that even in the earlier years when the aggregation approach adopted by the appellant company was not accepted by the learned TPO, still, this international transaction of export of packaging material was accepted by the learned TPO to be inextricably linked to the activity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts of the case, the assessee was a subsidiary of Tetra Laval Holding and Finance SA, Switzerland. The assessee was engaged in the manufacture and supply of packages based on aseptic technology, which helps keeping perishable liquid foods fresh for months without refrigeration or added preservatives. The assessee company also designs, manufactures and supplies modular equipment for continuous processing and packaging of liquid food in the dairy, cheese making and prepared food industries. The Tetra Pack group was globally engaged in the development, manufacture, sale and installation and servicing of processing, packaging and distribution systems for liquid food products. The assessee was not manufacturing the entire range of processing equipment; it supported its customers in India by importing such equipments from its overseas group entities. The assessee had two main divisions i.e. packaging division and processing division. For the year under consideration, the assessee had entered into various international transactions with its associated enterprises, which are enlisted at page 3 of order of TPO totaling ₹ 1343.40 crores. The Assessing Officer made reference under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng segment, the assessee had incurred loss. On comparison of the price at which similar products were sold to associated enterprises and third parties, it was observed by the TPO that the assessee had incurred significant loss on the total exports of packaging material exported to its associated enterprises when compared to the sale in domestic market. The assessee raised strong objections against internal TNMM method to be applied but rejecting the same, the TPO made an adjustment of ₹ 73.82 crores to the international transactions pertaining to exports of packaging material as the assessee was earning profit in the domestic market. The TPO observed that it did not justify the losses on its international transactions with associated enterprises. In respect of second segment i.e. straws segment, where the assessee in the segmental had shown loss of ₹ 2.05 crores at gross level and ₹ 3.12 crores at net level, the submissions made by assessee for incurring aforesaid losses were not accepted. Where, as per the TPO, the assessee has not been able to recover even the cost of imported straws, downward adjustment of ₹ 3.50 crores was made to the value of imports of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h has been allowed by the DRP in assessment years 2008-09 and 2009-10. However, while passing the order for the year under consideration, the DRP in para 3.8 at page 12 admits that no appeal against order of DRP as in earlier years, hence addition. The learned Authorized Representative for the assessee pointed out that the order of Tribunal in the appeal filed by Revenue relating to assessment year 2011-12 in para 13 at page 16 decides the issue of aggregation and in para 14 refers to the application of CUP method for finished goods. Further, in assessment year 2012-13, the Tribunal allowed aggregation approach and also decided the issue that internal TNMM method was not right method to be applied. Referring to grounds of appeal No.1 to 5.3, the learned Authorized Representative for the assessee pointed out that the issue is with regard to TP adjustment. However, in ground of appeal No.6, the issue raised is against disallowance made under section 40(a)(i) in assessment year 2011-12. Since in this year, the TDS was deposited, hence the expenditure was claimed as deduction, but matter has been set aside to the file of Assessing Officer in assessment year 2011-12 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of packaging material segment. The TPO had applied CUP method for determining arm's length price of small segment of transaction of packaging solutions, which was not upheld by Tribunal vide para 14 and allowed the claim of assessee. 12. The Tribunal while deciding the issue in assessment year 2009-10, order dated 20.09.2017 had noted the fact that as part of its packaging activity, as business strategy, it was identifying the customers and marketing its products to them. In addition, the assessee was also supplying packaging material and also straws were sold to the customers as business strategy. The said straws were imported from associated enterprises for sale to the customers. So, this was business strategy applied by assessee and the transaction of sale of straws cannot be benchmarked separately, once the aggregation approach is to be applied. Accordingly, we find no merit in the order passed by Assessing Officer/TPO in this regard. The issue stands settled by the order of Tribunal in assessment year 2009-10 onwards. In the order dated 20.09.2017 relating to assessment year 2009-10 vide paras 14 to 24 had decided the said issue and had applied aggregation ..... X X X X Extracts X X X X X X X X Extracts X X X X
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