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TMI Blog2022 (12) TMI 246X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of profit which is of the Employees State Insurance - HELD THAT:- The issues were highly discussed in different orders in the Co-ordinate Benches. He mentioned that the payment was made before the due date of filing the return u/s.139(1) of the Act. But at this moment, we are unable to verify the payment details. So, the issue is remanded back to the learned Assessing Officer for further adjudication. Disallwoance u/s 14A r.w.r. 8D - HELD THAT:- Assessee mentioned that no expenditure was incurred for the Assessment Year 2013 2014, the controversial situation on the fact between the Revenue and parties. The issue is further remanded back to the learned Assessing Officer for further verification in the light of the Assessee s payment. The Assessee should be given a reasonable opportunity to substantiate his claim. Disallowance u/s.40(ia) - non-deduction of TDS and Royalty and Guarantee Fees and Professional Charges - HELD THAT:- Assessee mentioned about the CBDT Circular No.5/2015 dated 15.07.2005 and mentioned that the TDS deduction in the previous year but paid in the subsequent year after the time limit prescribed u/s.200(1) of the Income Tax Act, 1961 shall be all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ature. The Assessee states that there was a sharp volatility in the transacting currencies of about 19.15% during the period for the Financial Year 2007- 2008 to the Financial Year 2011 2012 indicating that there was a lower foreign exchange rate (Rs.40.24 = 1 USD), when negotiated and accepted the price with the customer and a much higher rate when it actually imported the goods for the Financial Year 2011 2012. Further, adjustments towards usage of diesel in place of electricity supplied by the Tamil Nadu Electricity Board [TNEB]. The Assessee s plea was that during the financial year 2011-2012, Tamil Nadu was facing acute power issue and due to that, informally, industries were asked to run the Gensets during particular timings. To manage this, the Government of Tamil Nadu has even allowed for set off /reduced VAT to compensate the industries in the next year. The Assessee seeks an adjustment of Rs.10,71,87,811/- as this is the cost incurred in excess to cost that would have incurred in the normal course which are abnormal in nature and needs to be removed in arriving at the PLI. A further prayer was placed as per Section 92C(2) of the Act, the standard deduction of +/- 5% shoul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , one has to consider these factors, more so, our view is fortified by the decision of the Tribunal in the cases of Honda Trading Corp. India Pvt. Ltd. V. ACIT in ITA No.5297/Del/2011 for the assessment year 2007-08 and DHL Express (India) Pvt. Ltd. V. ACIT in ITA No.7360/Mum/2010 for the assessment year 2006-07. Accordingly, we direct the TPO to provide considerable exchange fluctuation adjustment while determining the ALP. Accordingly, this issue is remitted to the file of the TPO for determining the ALP after considering the above three components i.e. customs duty adjustment, air freight adjustment and foreign exchange fluctuation adjustment. 4.1 The learned Counsel of the Assessee further asked for adjustment towards the payment of custom duty. The Assessee imported raw-material such as rubber and polyurethane related chemicals, final products weather strips and water into car. He further relied on the judgement of the ITAT, Chennai Benches in the case of M/s. Mobis India Limited Vs. The Deputy Commissioner of Income Tax [I.T.A. No.2112/Mds/2011, 2014 (2) TMI 36], and requested for an adjustment during calculation of the PLI. He further mentioned that both the issues wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rently based on the assumption that had you relied upon the power supplied by TNEB, instead of using the diesel generators what would have been the saving in cost claimed as an item of reduction from the operating cost. The above adjustment is a one sided adjustment. You may in a position to reveal certain information which you claim to be material in the computation of operating margin. But what is the scenario in the cast of comparables on such one sided claims of yours is not known. It may be that the financials of the comparable do not reveal any such information. Even in your financials, the said item of expenditure is not treated as abnormal in nature so as to warrant a specific mention in your financials. In the absence of specific mention of such extraordinary cost either in your case, or in the case of comparables, the same has to be treated as not material in nature warranting a separate treatment. 5. Besides, you have failed to take note of the information which you have furnished as part of the financials. The capacity utilization details in your case in the earlier year 31.03.2011 deserve mention in the absence of data for the relevant previous year viz.31.03.201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4550900499 Margin on revenue (-)2.22 % 8. You have benchmarked your operating margin with reference to the solitary comparable M/s. Sundaram Industries Limited. Fresh search was done using the Prowess data base which resulted in four additional comparables as mentioned in the Annexure of which PPAP was considered as a comparable in the earlier assessment year also. The revised stand alone operating margin of the comparables is 10.97% measured on revenue. Your revised operating margin on revenue is (-)2.22% 9. Arm s Length Price is proposed to be determined by taking your operating loss at 2.22% and your comparable operating margin of 10.97% which calls a total adjustment of 13.19% on your revenues [unquote]. Reply to show-cause notice: 6. Assessee clarified that the value of Forex considered in the Cash Flow Statement represents gain of Rs.4,84,72,577 and not loss as presented in the show cause notice and the breakup in the Forex Loss reported in P L {schedule 28(ii)(p)} was given as under: Type Loss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... translational loss in its written submission dated 23.11.2015 in Annexure IV. As per the breakup, the direct transactional loss was Rs.3,24,04,929 and translational loss was Rs.10,09,59,985. So, this loss was only the notional loss or paper loss and it was not a crystallized loss. 8. We considered the issues and relied on the documents available on record. All the issues together are remanded back to the learned Assessing Officer for de novo adjudication. The learned Assessing Officer should consider afresh on the basis of the above mentioned discussion. The learned Counsel of the Assessee pointed out that the foreign exchange loss is a genuine loss which is not at all a notional loss. The Assessee was also directed to submit all relevant documents before the learned Assessing Officer to substantiate its claim. Nonetheless, a reasonable opportunity should be allowed to the Assessee for redressal of its grievances. 9. Corporate Taxes: The learned Counsel of the Assessee, Mr. B. Ramanakumar, Advocate also agitated three issues related to the disallowance payment of profit which is of the Employees State Insurance. The issues were highly discussed in different orders in the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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