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TMI Blog2021 (4) TMI 1023X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the addition of Rs. 7,32,39,369/- on account of adjustment in Arm Length . 2. The Ld. CIT(A) has erred by not allowing an opportunity to the AO/TPO while considering the fresh submissions before the CIT(A). While the need of these details were mentioned in the AO/ TPO order. Thus, it is not as per the Rule 46A. 3. The CIT(A) has erred by not allowing an opportunity to the AO/TPO while considering the fresh submissions before the CIT(A), while the need of these details were mentioned in the AO/TPO order. Thus, it is not as per the Rule 46A. 4. The CIT(A) has erred by not considering the finding of the TPO that documents provided by the assessee before the TPO does not provide terms and conditions such as payment terms, service l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The CIT(A) has erred by not calling a remand report from the AO/TPO while considering fresh submission from the Assessee while accepting the Net Margins the assessee (After excluding the abnormal losses) at 12.71%. This is violation of R 46A. 3. The assessee is a company engaged in the business of developing package software and providing software consulting services primarily for the use in delivery communication Industry. The assessee during the relevant previous year has entered into the following international transactions: S. No. Description of transaction Method Used Value (In Rs.) 1 Sale of Software development product CUP 29,05,100 2 Provision of software development service TNMM 72,53,13,306 3 Payment f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal before the CIT (A). The CIT (A) partly allowed the appeal of the assessee. 5. The Ld. DR submitted that the CIT (A) erred in not allowing an opportunity to the Assessing Officer /TPO while considering the fresh submission before the CIT(A). Thus, the admission of the additional evidence/details is not as per Rule 46A. The Ld. DR further submitted the CIT(A) erred by not considering the finding of the TPO with documents provided by the assessee before the TPO as the same does not provide terms and conditions such as payment terms, service level agreement and qualification of assessee's power deployed in BPO. There is no remand report obtained from the Assessing Officer while exceeding the Net Margin of the comparable at 9.66 %. The Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as calculated at 12.71%. The Ld. AR submitted that claim of comparability adjustment was not made for the first time before the CIT(A) and only the calculation of the amount of adjustment was revised. The Ld. AR further submitted that no additional evidence was filed by the assessee before the CIT(A) and the CIT(A) has powers for allowing the claim of the assessee. The Ld. AR relied upon the following decisions wherein it has been held that the powers of the CIT(A) are co-terminus with that of the assessing authority: a) Jute Corporation of India Ltd. vs. CIT 187 ITR 688 (SC) b) CIT vs. Kanpur Coal Syndicate (1964) 53 ITR 225 (SC) The Ld. AR further submitted that in the transfer pricing documentation, the assessee determined arm's l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , only 208 man months were billed by the assessee. Therefore there was idle capacity to the extent of 51%. After making adjustment on account of idle employee cost the adjusted operating margins of the assessee is work out at 45.87% which is more than the arithmetic mean margin of the comparables companies at 15.49% (corrected margin 9.66%). Thus, this does not warrant any transfer pricing adjustment in respect of international transactions undertaken by the assessee. The Ld. AR further submitted that in terms of Rule 27, the assessee is entitled to defend the order of the CIT(A) before the Tribunal on all grounds including the grounds which have either not been decided by the CIT(A) or have been decided against the assessee. For which, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nate the difference between the appellant and the comparables. 9.6 Considering the operating profit margin of the appellant computed after excluding the abnormal cost / loss, at 12.71% as against the operating profit margin of the comparable companies identified by the TPO (after correctly computing the operating profit margin) at 9.66%, the adjustment made by the TPO, on account of the difference in the arm's length principle of the international transactions does not survive. In my considered view, even if the operating profit margin computed by the TPO at 15.49% is considered the operating profit margin of the appellant computed after excluding the abnormal cost / loss, at 12.71% falls within the range of +/(-)5% provided as per provi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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