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TMI Blog2021 (9) TMI 130X X X X Extracts X X X X X X X X Extracts X X X X ..... ransfer Pricing Officer ('TPO')/Ld. Assessing Officer ('AO') and consequently the Hon'ble Dispute Resolution Panel ('DRP') have erred in law and on facts and circumstances of appellant's case, in making a transfer pricing ('TP') adjustment of Rs. 4,06,60,617/- on account of Arm's Length Price of the International Transactions of the appellant under section 92CA of the Income Tax Act, 1961 ('the Act'), wholly on illegal, erroneous and untenable grounds. 2. The order of Assessment including order of the Ld. TPO is bad in law and not in accordance with the facts of the appellant. 3. The Ld. TPO/Ld. AO and consequently the Hon'ble DRP have grossly erred in law and on facts and circumst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actions forming part of the cost base of the appellant bears to the total operating cost of the appellant i.e. 77.84%. 5.1 The Ld. TPO/Ld. AO/Hon'ble DRP erred in law in not restricting the adjustment to the proportion of international transactions with AEs on the cost side which were admittedly 77.84% of the total operating cost. 6. The penalty proceedings initiated u/s. Sec 271(1)(c) are on wholly illegal and untenable grounds since there was no concealment of any income nor submission of inaccurate particulars of income, nor any default according to law by the appellant. That each ground is independent of and without prejudice to the other grounds raised herein." 3. Representatives of both the sides were heard at length. Case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontentions of the assessee for capacity utilisation adjustment for personnel expenses, adjustment importing duty and related costs on raw material and proportionate transfer pricing adjustment. Final assessment order was, accordingly, passed which is under consideration before us. 9. Ground Nos. 1 and 2 are of general in nature and need no separate adjustment. 10. Ground No. 3 relates to non granting of adjustment on import duty. 11. This issue was considered by this Tribunal in assessee's own case in A.Y 2013-14 in ITA No. 7801/DEL/2017 order dated 08.06.2021 and has decided this issue against the assessee and in favour of the Revenue. The relevant findings of the order of the Tribunal read as under: "With respect to ground number ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... angibles) and personnel cost, as has been done by the assessee. Assessee has to show that the capacity utilisation of the assessee was 63% and that of the comparables averaged at 100%. No fact can be assumed in the name comparability adjustment." vii. The factual matrix of the case remains the same for this AY also. So there is no reason to differ from the above direction of the DRP. The TPO has provided for the underutilization of capacity by adjustment in depreciation. The order of the TPO is upheld on this issue. 6. Without prejudice to the above, the Ld. AO/TPO has erred in law and on facts and circumstances of the case of the assessee in computing the proposed Transfer pricing adjustment by allocating the entire difference between ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aim in the case of assessee compared to the comparable companies. In view of this we set aside ground number 3.3 of the appeal back to the file of the learned transfer pricing officer with a direction to examine the claim of the assessee that those expenditure on salary of the employees who are working for the development of the business and not for earning the operating profit for the year requires proper adjustment." 16. As no distinguishing fact has been brought to our notice, respectfully following the decision of this Tribunal [supra], we direct accordingly. Ground No. 4 is allowed for statistical purposes. 17. Ground No. 5 relates to the grievance that in computation of transfer pricing adjustment, the Assessing Officer erred by all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .38%, a TP Adjustment proportionate to that extent could be made in respect of such international transactions. Thus, only an adjustment of Rs. 30,33,593/- could be attributed to the international transactions in question. The same was accepted by the CIT(A) as well as the Tribunal. We do not find any infirmity with their decision." 20. Respectfully following the findings of the Hon'ble Jurisdictional High Court of Delhi [supra], we direct the Assessing Officer to accept the computation of proportionate TP adjustment as computed by the assessee and as exhibited elsewhere in this order. Ground No. 5 is accordingly allowed. 21. Ground No. 6 is premature and is dismissed. 22. In the result, the appeal filed by the assessee in ITA No. 51 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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