9911796707
TMI Blog2020 (6) TMI 311X X X X Extracts X X X X X X X X Extracts X X X X ..... t of assessee. 3. That the learned TPO as well as the DRP and consequently the AO have grossly erred in law and on facts and in the circumstances of the case in erroneously: 2.1 Rejecting the scientifically run search process of the assessee without any reasons. 2.2 Rejecting the assessee's comparables for the trading segment of the assessee without giving any cogent reasons. 2.3 Carrying out a fresh search process, and not giving the assessee such search process used against the assessee, which is against the principle of natural justice. 2.4 Cherry picking the comparables. 4. The learned TPO as well as the DRP and consequently the AO have grossly erred in law and on facts in choosing new comparable companies which were different from the assessee both in the type of nature of activities and the functions performed, which is against the rules of comparability under Rule 10B(2) of the IT Rules. 5. The learned TPO/AO has earned in law in not deciding upon exclusion or inclusion of McNally Sayaji for not including in final list of comparable in spite of specific direction of Hon'ble DRP. 6. That the Hon'ble DRP has earned on the facts of the case in alleging that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the learned TPO has erred in law not in giving the assessee the details of fresh search process so that assessee may submit its objection, which is against the principle of natural justice. 17. The Hon'ble DRP has erred in law and on facts in sustaining the new comparable companies chosen by the TPO which were different from the assessee both in the nature of activities and the functions performed, which is against the tenet of comparability under Rule 10B(2) of the IT Rules. 18. That the Hon'ble DRP has erred on the facts of the assessee's case in the alleging that the assessee seeks exclusion of only comparable with higher margins. 19 That the Hon'ble DRP has erred on facts in not appreciating that the assessee is low end not-risk bearing in its support service segment and comparable should be selected accordingly. 20. That the learned TPO has erred in law treating the prior period expenses as operating in nature since they are extra ordinary and one time. 21. Without prejudice to the above, the Hon'ble DRP has earned in law in not allowing the risk management to the assessee as per Rule 10(3) in spite of mathematical calculation given by the assessee. 22. That the ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wrongly computed book profits which is not as per provisions of section 115 JB. 35. That the penalty proceedings initiated under section 271(1)(c) on only illegal and untenable grounds since there was no concealment of any income non-submission of inaccurate particulars of income, nor any default according to law by the assessee. 36. That the interest charged under section 234B and 234C of the Act is on wholly, illegal and untenable grounds and is prayed not to be held. 37. That each ground is independent of and without prejudice to the other grounds raised herein. 38. The appellant craves leave to add, amend, alter, change vary or substitute any of the aforesaid grounds or raise an additional ground if it become necessary to do so in the interest of justice. 2. Briefly stated facts of the case are that the assessee company was incorporated on 03/10/2011. The assessee company is a subsidiary of 'Bergen Engine AS, Norway'. Pursuant to a resolution passed by its Board of Directors in February 2012, the diesel power business of 'Rolls-Royce India private limited' was purchased through a slump sale by it and since the acquisition of said business, the assessee company is engag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... goods as under: "Purchase of traded goods" Background: BEIPL trades in spare parts used in engines used in power generation in the energy industry. It has imported such goods to be sold to third parties from its AE during the year. In this regard, functions undertaken by the BEIPL have been articulated below: (a) Functions: Nature of Function BEIPL AE Procurement Yes BEIPL is responsible for purchasing the traded goods from its AE based on the confirmed requisition to be raised on it by the customers in India. On receipt of the purchase order, the associated enterprises dispatch the goods. No The AE is responsible to dispatch goods to BEIPL on receipt of the purchase the order from it. The AE does not take any functions in relation to the transaction of procurement of the traded goods. Research & Development No BEIPL does not undertake R&D and therefore, does no function in relation thereto Yes AEs carry out the function of R&D for supplying goods to BEIPL Inventory Management Yes It is the responsibility of BEIPL to warehouse the goods once they arrive in India till the time they are sold to ultimate customer. All functions regarding warehousing; maintainin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o AE is not exposed to any risk on account of foreign exchange fluctuation since the invoices raised by them are in their local currency; they do not have risk on this account. Inventory Risk: This covers the risk of theft, breakage arising out of stocking and warehousing of the products, and obsolescence arising out of technological upgradation and enhancement etc. Yes but limited After the goods are imported by BEIPL, any risk such as theft, obsolescence, market risk arising out of stocking and warehousing the imported products is borne by BEIPL. In most cases BEIPL imports the goods only after a confirmed order is placed by the customer and therefore, the goods are dispatched to the customer as soon as they are imported and thus, the inventory risk of BEIPL is substantially reduced. No The AEs are not exposed to this risk as they are supplying goods being traded by BEIPL after a confirmed order has been raised on them. Research & Development Risk: This risk arises when the research and development activities for new and existing products has not been carried out property No BEIPL is not responsible for any R&D activities of the traded goods purchases by it; therefore, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mparability may suffer. (b) Where a comparable is enjoying a monopoly or exclusive rights to sell in the market or faces no competition in its market, the comparability suffers as the conditions/circumstances of sale should also be comparable. The resale price margin cannot be compared in those cases also where one of the parties is making resale using its intangible assets such as marketing network while the other party has no such intangible. (c) The functions performed which affect the resale price margin should also be similar or it should be possible to make adjustment for such differences (d) The reliability of the RPM may be affected if there are material differences in the ways the Associated Enterprises and the independent enterprises carry out their businesses. The differences include effect of management efficiency on labels and range of the inventory maintenance, marketing distribution affords etc. (e) The resale price margin may be influenced by the level of the activities performed by the reseller i.e. full risk of ownership together with full responsibility for and the risk involved in advertising, marketing, distribution and the ending of the goods. (f) Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es OP/OI (%) 1. Jullundur Motor Agency (Delhi) Ltd. 3.68 2. Mahindra Automobile Distributor Pvt. Ltd. 26.99 3. PAE Ltd. -2.02 4. Stanes Motors (South India) Ltd. -3.56 Average 6.27 4.6 The difference in the profit level indicator of the assessee as computed by the assessee and the TPO is summarised as under: Particulars Goodwill as Non-operating Goodwill as Operating Difference Remarks Sale of products 1,19,13,86,406 1,19,13,86,406 Other Operating Revenue l 2,73,09,872 2,73,09,872 Other Income 2,71,932 2,71,932 Forex gain 57,27,991 57,27,991 Total Operating Revenue 1,22,46,96,201 1,22,46,96,201 Purchase of stock in trade 88,40,99,564 88,40,99,564 Change in inventory 48,25,200 48,25,200 Employee benefit 3,01,34,150 3,01,34,150 Depreciation 11,71,87,930 11,71,87,930 Other expenses 5,81,31,994 17,24,04,953 -11,42,72,959 Goodwill amortized Total Operating cost (OC) 1,09,43,78,838 1,20,86,51,797 & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayed to be upheld. - Further the operating assets that generate revenue and are intrinsic to the day to day working/functioning of a company and are used for the carrying out of business are relevant for establishing comparability under Rule 10B(2), i.e., FAR analysis rule. Once, as per the FAR analysis the assets used that establish comparability are similar then the effect of depreciation on the PLI of the comparables and the assessee will also be similar. In the present case, the asset base of the assessee has an asset of the nature of Goodwill which is not similar to the assets used by the Comparables as chosen with the assessee or the TPO. - The amortization of goodwill, which was the difference between the costs of actual physical/tangible assets purchased and the price paid for acquiring a running business represents an intangible assets purchased. Goodwill is an intangible rather invisible asset which cannot be brought into FAR analysis while comparing the financial results of the entities since the contribution of intangibles cannot be computed. The purpose of TP analysis is to compare the like with like. Any exceptional item which effects the comparisons in an open ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year after year, in fact, it is amortization of its value over a fixed amortization period. The Ld. DRP has failed to appreciate the difference between depreciation and amortization, it is respectfully submitted. - It is to be appreciated that the treatment of depreciation in computation of taxable income under the Act, is different from the computational mechanism for PLI for the determination of arm's length price given in Chapter X which are special provisions. Thus, claiming of depreciation on Goodwill accounted for due to a Business purchase under Income Tax Act cannot change the extra ordinary nature of Goodwill amortized in the Audited Financials as per the Companies Act, used for the Computation of PLI, and should be adjusted as a nonoperating/ non-reoccurring expense. - The PLI of the assessee in trading segment after taking amortization of goodwill as non-operating will be 11.91% (Table 2 above) which is more than the PLI of 4 comparables chosen by the TPO of 6.27%(page 39 of TPO's order), thus the transaction of Sale of Traded Goods of the assessee are at ALP. Although the assessee is separately challenging the comparable and other issues, however, without prejudice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iate that the comparability analysis is required to pass the test of FAR analysis i.e. functions performed, assets employed and risk assumed. There is a clear and demonstrative difference in asset base of the assessee and these comparable, which need a definite adjustment as per rules. - Reliance in this regard is placed on following judicial precedents: * Sabic Research and Technology Pvt. Ltd. (1065/Ahd/2012) * Siemens Healthcare Diagnostics Ltd. Vs. ACIT (152 ITD 155) * SchefenackerMotherson Limited (123 TTJ 509) -"The taxpayer in both the assessment year showed before the revenue authorities that profit shown by the taxpayer satisfies arm's length requirement on ratio of cash profit to sales if uniformly applied. As the deduction of depreciation is leading to wide differences, the same should be excluded." * M/s. Qual Core Logic Limited Vs. Deputy CIT (ITA 893/Hyd./2011)- "The object and purpose of transfer pricing is to compare like with the like, and to eliminate differences, if any, by suitable adjustment is to be seen. Therefore, there was justification on the part of the assessee in pleading that profits are taken without deduction of deprecation as depreciation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h written submission. C. Objections to the New Set of Comparables of the Ld. TPO (i) Not excluding Mahindra Automobile from final list of comparable. - Among 4 comparables chosen by TPO for trading segment of the assessee, the PLI of Mahindra Automobile Distributor Pvt. Ltd. is an outlier from other 3 companies. Your honour would notice that the PLI of Mahindra Automobile is 26.99% while of other 3 companies. Your honour would notice that the PLI of Mahindra Automobile is 26.99% while of other 3 companies is ranging from (0.39)% to (3.56)%. This clearly shows that the company is earning more than ordinary net profits than the other trading companies. While analyzing the annual report of Mahindra Automobile for the year under consideration, your honour would notice from the face of the P/L that during the year the company paid excise duty on sale of products 12% to 13% (approx). This shows that the Mahindra Automobile is not purely trading company and its revenue comprise of an activity which amounts to manufacture such that excise duty is payable on it. The difference in the functions performed by it on account of excise duty paid shows that it is earning more profit that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) 3.68 PAE Ltd. -2.02 Stanes Motors (South India) Ltd. -3.56 Average -0.63 - If this company is excluded, the assessee will be at ALP even if no other objection is entertained on comparable or other issues. - If the comparable of the assessee namely, Mcnally Sayaji is retained in the final list along with the other 3 comparables chosen by the Ld. TPO, the PLI would be as follows": Particulars (TPO's comparables) PLI % as determined by TPO(OP/OI) Jullundur Motor Agency (Delhi) 3.68 PAE Ltd. -2.02 STanes Motors (South India) Ltd. -3.56 McnallySayaji -039 Average -0.57 - Thus it is prayed that the Mahindra Automobile be excluded from final list of comparables and assessee's own comparable namely McnallySayaji be retained in the final list (ii) Objections to the other comparables selection by the TPO - The assessee filed its objections in respect of other 3 comparables also selection by the TPO through fresh search process. - The companies selected by the TPO are engaged in automotive sector and functionally different from the trading segment of the assessee in which assessee is selling spare parts of engines used by engineering industry. - T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertained. 6.1 One of the main objections of the assessee for including M/s Mahindra Auto Mobile distributer is that during the year the company paid excise duty on sale of the products of 12% to 13% approximately and in view of the same the company is not purely trading and its revenue comprise of an activity which amount to manufacture such that excise duty is payable on it. Thus, there is difference in function performed by it on account of the excise duty paid so that it is earning more profit than the pure trading companies chosen by the learned TPO. Hence this is not comparable to the assessee's trading segment. 6.2 On verification of the Annual Report of the Company M/s Mahindra Auto Mobile distributor, which was made available during the course of hearing, we find that in profit and loss account of the payment of the excise duty is reported. We find that no further detail in respect of the excise duty paid by the company is available in the Annual Report. The excise duty is primarily payable on the manufacturing activity and in absence of any detail, the company cannot be treated as pure trader of products. In such circumstances, the company become functionally different f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trusion Ltd. [TS-491-HC-2014-(TEL&AP)-TP] wherein it was held that where assessee had chosen most appropriate method, TPO must record reason for rejection of such method. The Tribunal did not find any substance in any of the Transfer Pricing Officer's multiple arguments for arguments for rejection of assessee's internal Cost Plus Method and adoption of external Transaction Net Margin Method. In other words, it was found by the Tribunal that the decision of the Transfer Pricing Officer was absolutely arbitrary and irrational and hence it set aside the orer of the Transfer Pricing Officer. We do not find any element of law for consideration in these appeals. - Reliance is also placed on L'oreal India Pvt. Ltd. [TS-716-ITAT-2011 (Mum)] and DIC India Ltd. [TS-753-ITAT-2016(Kol)-TP]. - Para 9- The learned CIT(A) gave a categorical finding that the Cost Plus Method adopted by the assessee is based on the functions performed and not on the basis of types of product manufactured, as normally the pricing methods get precedence over profit methods. The CIT(A) observed that even according to the OECD guidelines the preferred method is that the method requires computation of ALP dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thod is that the method requires computation of ALP directly based on gross margin, over other methods which require computation of ALP n an indirect method because, comparing gross margins extinguishes the need for making adjustments in relation to differences in operating expenses, which could be different from enterprise to enterprise." 10.3 Further, the Ground No. 15, 16 and 19 have been raised by the assessee in respect of the exclusion of the comparables of the assessee. 10.4 Before us, in its written submission, the assessee submitted as under: - The Ld. TPO also rejected the comparables selected by the assessee for benchmarking its support services namely Denave India, Mahindra Logistic and TVS Logistic without giving any cogent reasons (TPO page 41). - It is not open to the TPO to reject comparables of the assessee without functional analysis of the same. Reliance is placed on Roche Products India Pvt Ltd. Vs. ACIT [TS-154-ITAT-2016-Mum-TP] "the comparables selected by the assessee should not be ignored lightly, unless and until it can be proved that the verables selected by it were functionally or otherwise difference from the job done by it." - The assessee in it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erforms no function in this regard. The functions performed by BEIPL are explained as under: (a) Functions Nature of function BEIPL AE Market support Yes BEIPL incurs expenditure for meeting the prospective customers at various locations on behalf of its AEs and uses its manpower for the same. No AE performs no function in this regard Project support Yes BEIPL provides support services like administrative service, human resource service for the specific project, ensuring resource availability at correct time. Also incurs expenditure for coordinating with various customers on behalf of AE. The administrative operations performed by the company are in the nature of office utilities, travelling and conveyance, telecommunications, etc. No AE performs no function in this regard. With regard to these support services, AE does not perform any function for the performance of any service mentioned above. AE only compensate BEIPL the cost incurred in providing support services along with mark-up commensurate with the risk undertaken. (b) Assets All the assets employed by BEIPL after depreciation (as per books of account) are integral part of business of BEIPL which help ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompared to other players in the industry. AE on the other hand bears all the risk associated with receipt of PMS & MSS services due to any service failures on the part of BEIPL it being responsible to the ultimate customer." 10.7 Thus, the assessee has characterized itself as no risk entity having engaged in providing PMS and MSS services to its Associated Enterprises. 10.8 We find that the learned TPO selected 13 comparables with average margin PLI of 12.89% and computed the adjustment to Rs.34,61,745/-. The learned DRP directed to exclude the comparable namely M/s Just Dial Ltd which resulted in average margin PLI of the remaining comparables at 11.32 % and resultant adjustment to Rs. 26,58,897/-. 11. The comparables objected by the assessee are discussed as under: Aptico Ltd. 12. The learned Counsel of the assessee submitted that the company is functionally different. The learned Counsel submitted that the company is engaged in providing consultancy services particularly in the field of energy management, as against the assessee under the head 'PMS and MSS' provided support services to AE such as liasioning activities, coordination with customers, logistics etc., in the oil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raining program, which is distinct from the function of the support services in the field of project management and marketing support provided by the assessee. The support services rendered by the assessee i.e. liasioning and logistic etc are of very basic level and don't require highly skilled manpower, whereas the skill development and entrepreneurship development require special knowledge and manpower. 12.4 Further, as far as objection of the company being a Government Company, the learned TPO himself on page 52 of the transfer pricing order, has mentioned that the company is a technical consultant organization promoted jointly by all India financial institutions (IDBI, IFCI, ICICI), Industrial Development Corporation of Andhra Pradesh and commercial banks. Further the learned Counsel referred to the comments of the Controller and Auditor General (CAG) of India under section 619(4) of the Companies Act on the accounts of the 'Aptico Ltd', for the year ending on 31/03/2013. It is evident that company being a promoted by public sector undertakings, is akin to Government Company. We find that the company has been excluded by the Tribunal in the case of 'Rolls-Royce India private l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the support services of raising invoices, coordination with customers, logistics etc. in the oil and gas sectors, which are basically a low-end service having no risk and thus the company is not functionally similar to the assessee. The Ld. Counsel relied on the decision of the Tribunal, Mumbai bench in the case of Travelex India private limited in ITA No. 8192/ Mum/2010 for assessment year 2006-07. 13.1 The learned DR, on the other hand, relied on the finding of the learned TPO/DRP and submitted that function of the company are primarily comparable to the assessee. 13.2 We have heard rival submission of the parties on the issue of exclusion/retention of the company as comparable. As far as functions of the company are concerned, the learned TPO himself has mentioned that the company is engaged in providing services related to Director General of Foreign Trade (DGFT), customs/excise and service tax -related services. Clearly these services are in the nature of the consultancy or services of expert nature and cannot be compared with routine support services of raising invoices, coordination with customers, logistics etc. The company being functionally dissimilar to the support s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd defense acrostic products, which is in contrast to marketing support segment of the assessee. He submitted that the assessee is not a marketing company. 15.1 On the contrary, the learned DR relied on the finding of the lower authorities. 15.2 We have heard rival submission of the parties. We find that the learned TPO has recorded that the company is pioneer in bringing new products and technologies to India starting with kerosene lamp and various other products like toaster, pressure cookers, slotted angles etc and their successful promotion. We do not understand, how this company can be functionally similar to the support service segment of the assessee. In Profit and loss account, revenue from operations of Rs. 4,14,80,772/-has been shown. On perusal of the director's report ( Annual Report page 2), we find that during the year the company has shown income of commission from Dredge sales to government of Maharashtra and Jammu and Kashmir, ship lighting business. In view of specialized services rendered by the company, it cannot be considered functionally similar to the support service segment of the assessee. This company being functionally dissimilar at entity level , we di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the low-end services of support service segment of the assessee. 17.1 The Ld. DR, on the other hand, relied on the finding of the learned TPO/DRP. 17.2 We have heard the rival submission and perused the relevant material on record. In the profit and loss account income has been shown from operations. The relevant part of notes to the financial statement of the company is reproduced as under: "1. Background Kestone integrated Marketing Services Private Limited ("the Company") was incorporated on February 03, 1997 under the Companies Act, 1956. The company is a wholly owned subsidiary of CL Educate Limited. The company is engaged in the business of providing manpower, even management and infrastructure support services. 17.3 In view of the services of the event management and infrastructure support services rendered by the company, it cannot be compared functionally with the support service segment of the assessee and thus being functionally dissimilar, we direct the Learned AO/TPO to exclude the company from the final set of the comparables. Goldmine Advertising Ltd: 18. The learned Counsel referred to Annual Report of the company and submitted that service sales of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Engines and Project supplies Yes BEIPl performs the function of installing goods and equipments at specified location of the AE. No Since the AE is on the receiving and of the services it does not have any role in the installation function. Supervision & Maintenance Yes BEIPL provide supervision & Maintenance personnel at site to keep a check on the proper operation of the plant. No AEs do not have any role to play in the function of supervision. They receive the O&M services from BEIPL and as such do not perform any function. Repair Work Yes Repair of engine generating sets upon receipts of variation order from the customer. No AEs doe not have any role to play in the function of repair and overhaul. Service Quality Yes Since BEIPL is the provider of services it needs to keep a check ion the quality of services being proved. No AE does not have any functions to perform since it is on the receiving end of the services being provided by BEIPL (b) Assets All the assets employed by BEIPL after depreciation (as per books of account ) are integral part of business of BEIPL which helps it in carrying out the trading and service activities and are not exclusively us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd may face loss of potential revenues due to inefficiencies arising from obsolete infrastructure and tools. No AE does not bear any risk on this account because it is receiving the service. Credit/Collection Risk: This is the risk arising when a firm supplies its products or services to a customer in advance of its payment No BEIPL is rendering service to its associated enterprises which have high Creditworthiness therefore it bears no or negligible risk. No. The AEs make payment to BEIPL in relation to the services availed by them and thus, are not exposed to any credit risk. Foreign Currency Risk: The risk arises from any adverse fluctuations in foreign currency exchange rates, which could have a negative impact on the profitability of the company Yes BEIPL raise invoices in foreign currency. So, they are exposed to foreign exchange risk on account of fluctuations in foreign currency in relation to INR. Therefore, BEIPL bears this risk. No No risk on account of foreign exchange fluctuations arises for the AE. 24. The assessee under the segment has claimed to have provided ancillary services of operation and maintenance to its AEs. The assessee has characterized itself ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... banks and contains 12 divisions and dedicated workforce. On perusal of the Annual Report ( page -5) , we find that various divisions of the company include power division, energy and carbon service division, environment management and engineering division, banking and finance division, Infra-consulting group, securitization division, entrepreneurship and vocational training division, E-school division, BT and Pharma division etc. Thus company is engaged in providing diverse services and no separate segment information is available in Annual Report. Clearly, the company cannot be compared functionally with the technical support service segment of the assessee at entity level. The company being functionally dissimilar, we direct the Learned AO/TPO to exclude the company from the final set of the comparables under technical service segment. HSCC(India) Ltd. : 27. The Counsel submitted that the company deals in providing consultancy services in healthcare sector and also provide range of services in the field of construction of hospitals, laboratories etc. The learned Counsel also submitted that the company fails filter of the service income more than 75% of total income. The Counse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Transfer Pricing order dated 30/09/2016has reproduced the table of segmental result of the company, however on being asked to provide the Annual Report, the Learned DR could not produce the same despite sufficient time provided to him for making the Annual Report available before the bench . In absence of annual report of the company, neither it can be compared functionally with the assessee nor the operating result of the company can be considered as a reliable. Accordingly, we restore issue of comparability of the Company back to the AO/TPO to provide the Annual Report of the Company to the assessee and then decide the issue in accordance with law after providing adequate opportunity to the assessee. Certification Engineering and International Ltd (CEIL): 29. The learned Counsel submitted that the company is engaged in providing certification services and quality check services, which are in contrast to the services rendered by the assessee provision the nature of the repair and overall of engines used in oil and gas generating plants. He also submitted that CEIL the government of India undertaking having different risk and rewards in rendering services of managing qualit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -HC-2017-MAD]. 31.2 The learned DR, on the other hand, relied on the order of the lower authorities. 31.3 We have heard the rival submission and perused the relevant material on record. According to the provision of section 115JB of the Act, the book profit for the purpose of the provision means the net profit shown in the profit and loss account for the relevant year as increased by items listed in explanation-1. The list of the items in explanation-1 is reproduced as under: "Explanation 1.-For the purposes of this section, "book profit" means the profit as shown in the statement of profit and loss for the relevant previous year prepared under sub-section (2), as increased by- (a) the amount of income-tax paid or payable, and the provision therefor; or (b) the amounts carried to any reserves, by whatever name called, other than a reserve specified under section 33AC; or (c) the amount or amounts set aside to provisions made for meeting liabilities, other than ascertained liabilities; or (d) the amount by way of provision for losses of subsidiary companies; or (e) the amount or amounts of dividends paid or proposed ; or (f) the amount or amounts of expenditure rel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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