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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 ..... name, designation, experience, educational qualification, role and responsibility and the amount of salary paid, more particularly when there is a disproportionate difference between the salary expenditure incurred by the comparable companies with the salary expenditure of the assessee and there are seconded employees who are necessarily deputed to the assessee for the purpose of development of the business, the claim the assessee needs to be re-examined with the details furnished. This is more so when learned dispute resolution panel accepted that there is a higher depreciation claim in the case of assessee compared to the comparable companies. Computation of transfer pricing adjustment - AO allocating the entire difference between the arm's length operating profit and actual operating profit to the controlled transactions of the appellant - HELD THAT:- As relying on KEIHIN PANALFA LTD. [ 2016 (5) TMI 203 - DELHI HIGH COURT] 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 - ITA No. 5189/DEL/2018 - - - Dated:- 24-8-2021 - N.K. Billaiya, Member (A) And Suchitra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on facts and circumstances of the case of the appellant in computing the Transfer pricing adjustment by allocating the entire difference between the arm's length operating profit and actual operating profit to the controlled transactions of the appellant and not in the proportion in which the international transactions 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 records carefully perused and judicial decisions relied upon by the assessee duly considered.. 4. Briefly stated, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g expenses of the assessee, we hold that as necessary consumption of the material is only booked in the profit and loss account for which the materials are imported for onward sale/manufacturing whose revenue has been booked in the profit and loss account, the above adjustment cannot be granted. This is so for the reason that the duty structure of the material imported by the assessee and the sale price of the assessee takes into consideration all these commercial aspects of the trading or operation of the business of the assessee. Naturally, if the import duty factor (rate) is higher when raw materials imported by the assessee naturally the sale price will reflect the recovery of those import duty also from the buyers. 12. Respectfully following the aforesaid findings of this Tribunal, we hold accordingly. Ground No. 3 stands dismissed. 13. Ground No. 4 relates to the refusal of capacity adjustment as asked by the assessee. 14. We find that while dismissing the objection of the assessee, the DRP observed as under: vi. On this issue, the DRP in its directions for AY 2013-14 dated 22.09.2017 directed as under: 3.5.2 With regard to idle capacity adjustment, we d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 allocating the entire difference between the arm's length operating profit and actual operating profit to the controlled transactions of the appellant. 18. The proportionate transfer pricing adjustment as claimed by the assessee is as under: 19. We find that this quarrel travelled upto the Hon'ble High Court of Delhi in ITA Nos. 11 12/2015 and decided by the Hon'ble High Court vide order dated 09.09.2015. The relevant findings of the Hon'ble High Court read as under: 12. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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