9911796707
TMI Blog2022 (4) TMI 840X X X X Extracts X X X X X X X X Extracts X X X X ..... the proceedings of the ld. DRP as well as assessment order on this issue. Directions of the ld. DRP to ascertain the percentage of risk adjustment - After considering the arguments of the assessee as regards operating in a challenging market, competitive price offer from foreign and Chinese manufacturers and the necessity of retaining skilled manpower irrespective of fluctuation in volume of productions as well as the details of break-up of the employee cost, the ld. DRP was of the opinion that appropriate adjustment should be allowed to the assessee and accordingly directed the TPO to decide the percentage of risk adjustment to be calculated in this issue after taking into account of all the relevant facts and details. After carrying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble DRP failed to note that the assessee while calculating the PLI of M/s. Ashnoor Textiles Mills Ltd. has not included other operational expenditure of the industry amounting to ₹ 4.17 crore thereby ending with a positive operating profit, whereas, the TPO has included this operational expenditure and arrived at a negative OP/OC at (-)5.13%. 5. For these and other grounds that may be adduced at the time of hearing the directions of the DRP may be cancelled. 2. Brief facts of the case are that the assessee is a Private Limited Company carrying on the business of manufacturing and exporting of Ornamental Trimmings, Tassels, and Tiebacks, etc. The assessee filed its return of income for the assessment year 2011-12 on 20.09.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 31.01.2017, the Tribunal has observed that the ld. DRP has no power or authority to direct the TPO to decide the percentage of risk adjustment to be calculated, the ld. DRP was directed to decide the issue afresh after considering the relevant material on record. 2.2 The assessee carried the matter in appeal before the Hon ble Jurisdictional High Court. Vide order dated 10.06.2019 in Tax Case No. 118 of 2018, the Hon ble Jurisdictional High Court has directed the Tribunal to consider on merits of the case as to whether the said assessment order was justified or not by observing as under: 15. Thus, the order dated 24.11.2015 passed by the DRP is an order reducing the variation proposed in the draft assessment dated 25.02.2015. Thus, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld. DR has submitted that the assessee has projected the comparable M/s. Ashnoor Textiles Mills Ltd. margin as 5.06% before the ld. DRP by omitting the other operational expenditure of ₹.4.17 crore from the operation cost, whereas, without omitting the same, it s margin will be - 5.13% only and therefore, the TPO s stand in rejecting this comparable is justified. The ld. DR has pleaded for confirming the order of the TPO. Further, the ld. DR has submitted with regard to personnel cost adjustment, the assessee has not provided the required details such as the number of years of operation of the comparable companies, the actual capacity utilization etc. to substantiate the said claim. 4. Per contra, the ld. counsel for the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctional High Court has held that the order dated 24.11.2015 passed by the ld. DRP is an order of reducing the variation proposed in the draft assessment order dated 25.02.2015 and thus, the ld. DRP has not exceeded its jurisdiction and accordingly directed the Tribunal to adjudicate the issues on merits. 5.1 In this case, the assessee is dealing in manufacture of trimmings, tassels, tie backs, etc. The assessee has adopted TNMM as MAM to benchmark the transactions relating to sale of finished products and chose four comparables whose average PLI was 3.95%. The TPO has rejected two comparables namely, M/s. Ashnoor Textiles Mills Ltd. and SR Industries Ltd. as they are loss making entities and arrived at the comparables PLI of 5.62%. By wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... furnished comparative chart for percentage of employee cost on turnover and pointed out that the percentage of employee cost on turnover was 3.92% for RIBA Textiles Pvt. Ltd., 7.33% for M/s. Heritage India Exports Pvt. Ltd., whereas in the case of the assessee, it was as high as 29.09%. After considering the arguments of the assessee as regards operating in a challenging market, competitive price offer from foreign and Chinese manufacturers and the necessity of retaining skilled manpower irrespective of fluctuation in volume of productions as well as the details of break-up of the employee cost, the ld. DRP was of the opinion that appropriate adjustment should be allowed to the assessee and accordingly directed the TPO to decide the percent ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
