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TMI Blog2021 (2) TMI 352X X X X Extracts X X X X X X X X Extracts X X X X ..... impugned assessment year. Now, the law is fairly well settled that the balance unclaimed amount of additional depreciation has to be allowed to the assessee in the immediately succeeding assessment year. As decided in M/S RITTAL INDIA PVT. LTD. (NO. 1) [ 2016 (1) TMI 81 - KARNATAKA HIGH COURT] , SHRI T.P. TEXTILES PRIVATE LIMITED [ 2017 (3) TMI 739 - MADRAS HIGH COURT] and M/S. GODREJ INDUSTRIES LTD., [ 2018 (12) TMI 64 - BOMBAY HIGH COURT] the amendment made to section 32(1)(iia) by Finance Act, 2015 being clarificatory in nature would apply retrospectively. - Decided in favour of assessee. - I.T.A. No. 7041/Mum/2017 - - - Dated:- 27-1-2021 - Pramod Kumar , Vice President And Saktijit Dey , Member ( J ) For the Appellant : J. D. Mistry and Hiten Chande , Advs For the Respondents : A. Mohan , CIT ( DR ) ORDER Saktijit Dey, Member (J) Captioned appeal by the assessee arises out of assessment order dated 27-10-2017 passed under section 143(3) r.w.s. 144C(13) of the Act for the assessment year 2013-14 pursuance to directions of learned Dispute Resolution Panel (DRP)-II, Mumbai. 2. Grounds 1 2 being general in nature, do not require specific adjudic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and appropriate allocation keys have not been used to allocate the common expenses in two segments. Therefore, he rejected the segmental P L Account prepared by the assessee. Having done so, he considered the entity level margin of 0.8% for benchmarking. However, the TPO rejected four comparables selected by the assessee and introduced two fresh comparables. After considering the average margin of comparables selected, which worked out to 15.78% as against the margin of the assessee at 0.8%, the TPO proposed adjustment of ₹ 89.32 crores. The adjustment proposed by the TPO was added to the income of the assessee in the draft assessment order. Against the draft assessment order, assessee raised objections before learned DRP. In course of the proceedings before learned DRP, the assessee filed various submissions and also submitted that though segmental P L accounts were submitted, they were not properly considered. On the basis of submissions made by the assessee, learned DRP called fora remand report. After considering the submissions of the assessee and taking note of the remand report, learned DRP upheld the adjustment made by the TPO broadly on the following reasonings:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rned DRP that there is a huge difference in the profit margin of the export segment as per the two segmental accounts, the learned Senior Counsel submitted, as per the directions of DRP, the assessee has furnished a fresh working on without prejudice basis wherein the margin was worked out at 17.18%. Thus, he submitted, the allegation of the DRP that there is huge difference in the profit margin as per segmental P L account is grossly erroneous. To substantiate his claim, the learned Counsel drew our attention to the segmental P L accounts furnished in the paper book. Finally, the learned Senior Counsel submitted, in similar facts and circumstances, the TPO had made adjustment in assessee's own case in Assessment Year 2012-13 which was upheld by the DRP. Further, he submitted, when the issue came up before the Tribunal in ITA No. 1840/Mum/2017 dated 07-06-2019 reported in (2019) 107 taxmann.com 361, the Tribunal has completely rejected/disapproved the reasoning of the departmental authorities and directed the TPO to delete the adjustment after verifying assessee's claim on the basis of segmental P L account furnished before the TPO. Thus, he submitted, the aforesaid decisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the observations of the Bench in extenso, as under:- 6. We have heard both the counsel and perused the records. Leaned counsel of the assessee submitted that firstly there is no mandatory requirement for submitting audited segmental accounting. Nevertheless he submitted that even if the common expenses are allocated on the basis of whatever basis the operating margin of the assessee for the export segment would compare favourably with the mean of the operating margin of the comparables as selected by the TPO. Hence he submitted that authorities below have totally erred in rejecting the assessee's submission on the ground that segmental account is not audited. 7. Per Contra learned departmental representative would not disputed the proposition that even if the common expenses are allocated on the basis of whatever allocation key chosen the operating margin of the export segment of the assessee would compare favourably with that of the comparables selected by the transfer pricing officer. However the learned departmental representative in this regard submitted that if this proposition is accepted the matter may be set aside to the transfer pricing officer who would the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s left by the AO/TPO it would amount to conferring the jurisdiction of the CIT u/s. 263 to the Departmental Representative, which is not permitted by the statute. Let us take another situation. Suppose a particular deduction is permissible on the cumulative satisfaction of three conditions. The AO examines the case and finds the very first condition as tacking. Without examining the fulfillment or otherwise of the other two conditions, he rejects the claim, in that case if such first requirement is subsequently found to be fulfilled in the appellate proceedings, the Departmental Representative can very well point out to the tribunal that the other two conditions were also not fulfilled. By so contending the DR cannot be said to set up a new case, Rather it would amount to supporting the view point of the Assessing Officer on the question of deduction. But in no circumstance the Departmental Representative can be allowed to take a stand contrary to the one taken by the AO/TPO . Learned Counsel of the assessee submitted that this decision has been upheld by Hon'ble Jurisdictional High Court in ITA No. 692/2012. 9. Per Contra learned departmental representative submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of proper allocation key. It was never their case that there is lack of comparability. Learned departmental representative is well within his rights on supporting the order's of the authorities below. However he cannot argue that the transfer pricing officers action is incomplete and therefore the issue needs to be set aside so that the transfer pricing officer can be given a second innings. Such a view was rejected by the ITAT in the case of Maersk Global Service Centre (I) P. Ltd. (supra) above, which was duly upheld by the honourable jurisdictional High Court. 12. In the background of aforesaid discussion and precedent we find cogency in assessee's submission that the operating margin of the export segment of the assessee can be compared with the profit margin of the comparables selected by the transfer pricing officer by any allocation key selected. The TPO is directed to examine the veracity of this submission and delete the adjustment on account of arm's length price, if the result compares favourably. 8. Facts being identical, respectfully following the aforesaid decision of the co-ordinate bench we direct the Assessing Officer to compare the export se ..... X X X X Extracts X X X X X X X X Extracts X X X X
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