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TMI Blog2022 (2) TMI 811X X X X Extracts X X X X X X X X Extracts X X X X ..... efore, grounds/issues raised in this appeal as regards the TP issues are restored to the files of the AO/TPO. AO/TPO is directed to restrict the TP adjustment to the international transaction. Further, the AO/TPO by following the dictum laid down by the Tribunal in the case of IKA India (P.) Limited v. ACIT (supra), shall consider the claim of the assessee as regards the capacity utilization, RPT filter, etc. - IT(TP)A Nos. 1714/Bang/2016 & 1364/Bang/2017 - - - Dated:- 10-2-2022 - George George K. , Member ( J ) And Padmavathy S. , Member ( A ) For the Appellant : K.R. Vasudevan , Advocate For the Respondents : Muzaffar Hussain , CIT-DR ORDER Per George George K., JM These appeals at the instance of the assessee ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eclaring total income of ₹ 28,92,79,000. The assessment was selected for scrutiny by issuance of notice u/s. 143(2) of the I.T. Act. During the course of assessment proceedings, the matter was referred to the TPO to determine the Arm's Length Price (ALP) of the international transactions undertaken by the assessee with its Associated Enterprises (AEs). The TPO by his order dated 29.01.2016, determined the adjustment u/s. 92CA of the Act at ₹ 37,24,00,000 at entity level. The TPO also observed that this amount includes adjustment on account of royalty amounting to ₹ 22,82,57,924. The assessee filed objections before the Dispute Resolution Panel (DRP). The DRP vide its directions dated 20.06.2016 disposed of the objectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the set selected by TPO. (xii) Ground No. 14E - One company to be included as comparable (Rane Madras Ltd.) (xiii) Ground No. 14F - RPT filter applied wrongly at 5%, without any basis. (xiv) Ground No. 14G - Four companies to be included, which had got excluded only because of wrong application of RPT filter. 5. The learned AR submitted as regards the TP adjustment, the entire TP analysis by the TPO is without any legal basis and directly in contravention of many of the legal principles laid down by various judicial pronouncements. The learned AR submitted that while making independent search for benchmarking, the TPO applied the lower filter of ₹ 300 crore. It was contended that such a filter has no legal basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciation. Copies of the orders of the Tribunal for assessment year 2003-2004 and OGE passed thereafter is placed in the case law compendium. In view of the above submission, the learned AR prayed that both the transfer pricing adjustment and the corporate tax issue raised in this appeal ought to be remitted to the AO for de novo consideration. 6. The learned Departmental Representative has filed a brief written submission essentially supporting the TPO's order and the directions of the DRP. As regards the remitting the issue of TP adjustment and corporate tax to AO/TPO for fresh examination, the learned DR did not have any serious objection. 7. We have heard rival submissions and perused the material on record. The assessee admitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ention was raised before the approving authority vide assessee's letter dated 25.01.2016, which is placed at page 379 of the paper book in Vol. I. However, the TPO disregarded the contention of the assessee and made TP adjustment at entity level. It is settled position of law as upheld by the Tribunal in the case of IKA India (P.) Limited v. ACIT (supra) that transfer pricing adjustment should be restricted to only to the international transaction. It is further to be mentioned that for assessment year 2007-2008 in assessee's own case, the CIT(A) had held that the TP adjustment has to be restricted only to the international transaction by assessee with the AEs. The Revenue has accepted the same and did not carry the issue in appeal. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal in the case of IKA India (P.) Limited v. ACIT (supra), shall consider the claim of the assessee as regards the capacity utilization, RPT filter, etc. 7.5. As regards the corporate tax issue, we notice that an identical issue was considered by the Tribunal in assessee's own case for assessment year 2003-2004. The Tribunal (refer pages 57 to 78 of the paper book) had restored the issue relating to the restriction of claim of depreciation to the files of the AO for fresh verification. The AO after due verification had allowed the claim. Copies of the orders of the Tribunal and the order of the AO giving effect to the Tribunal's order for assessment year 2003-2004 are placed on record. Therefore, in light of order of ITAT in ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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