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TMI Blog2021 (1) TMI 1290X X X X Extracts X X X X X X X X Extracts X X X X ..... (TPSR) along with other documents and detailed submissions to justify the arms length price computed relating to international transactions. The said details along with documents and information were examined by the TPO and found not acceptable and issued a show cause notice. 3. It is pertinent to mention the most appropriate method adopted by the assessee was Transactional Net Margin Method (TNMM) which was accepted by the TPO. The assessee adopted profit level indicator of Operating Profit before Depreciation, Interest and Tax to Operating Cost but however, it was held by this Tribunal in assessee's own case that the Operating Profit of assessee and comparables should be calculated after depreciation since the depreciation is an integral part of Operating Cost. Regarding foreign exchange gain/loss has been treated as non-operative by the TPO which the Tribunal in assessee's own case we note that held the amount of foreign exchange gain/loss arising out of revenue transactions should be considered as an item of operating revenue/cost for the assessee as well as comparables. Further, the TP adjustment should be restricted to the international transactions and not at entity level ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cumstances of the case. 6. We note that in profit and loss account of assessee which is placed at Page No. 186 of the paper book wherein we note that the gross revenue from operations is at Rs.2,433.38 Million (Rs.243.338 crores). The segmental account of revenue operations were given at Page No. 199 of the paper book wherein it is noted the Finished Capacitors was sold at Rs.1,539.36 Million (Rs.153.936 crores) and Resistors at Rs.593.06 Million (Rs.59.306 crores). Therefore, it appears the sale of products in finished category of capacitors and resistors amounts to Rs.2,132.42 Million (Rs.213.242 crores) as against the gross revenue from operations Rs.2,433.38 Million (Rs.243.338 crores). It clearly shows the assessee has shown the revenue operations up to 60% to 70% from the sale of capacitors and resistors whereas there was no segmental information about manufacturing as well as sale of capacitors and resistors in the annual statement of CTR Manufacturing Industries Ltd. Therefore, in our view CTR Manufacturing Industries Ltd. cannot be a comparable to that of assessee. Hence, it should be excluded from the comparables. Therefore, we direct the AO to exclude the CTR Manufactur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pte Ltd. only for rendering I.T. Support Services. In addition, the assessee also rendered ARP services, BOMcon Support Services and Logistic, Power MOSFETS services and IEHS services to small extents. Since the major component is from I.T. Support services, we directed the ld. AR to place on record a copy of agreement under which such services were provided to the AE so as to properly ascertain their nature for deciding the comparability or otherwise of the companies challenged. On the next date of hearing, the ld. AR expressed his inability to produce the relevant agreement in terms of which the I.T. support services were rendered. It goes without saying that unless the true nature of services rendered by the assessee is precisely found out, the comparability of other companies cannot be conclusively decided. In view of the fact that the relevant agreement is not available on record, we deem it fit to set-aside the impugned order on this score and remit the matter to the file of AO/TPO. We order accordingly and direct the AO/TPO to first ascertain the precise nature of services rendered by the assessee under the I.T. support services and then examine the comparability or otherwis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 95 of the Act that the quantum of income embedded in the sum paid is a subject of the sum paid to the non-resident. He observed that sum paid by the assessee is chargeable to tax u/s. 195 of the Act and proposed disallowance of the aforesaid amount. 13. In order to come to above conclusion, the AO placed reliance on the directions of DRP in assessee's own case for A.Ys. 2012-13 and 2013-14 wherein on the consistency method it was held Vishay Singapore has made available various facilities to the assessee for which the assessee has made aforesaid payment and the nature of facilities indicates that the payment is in the nature of royalty as defined u/s. 19 r.w. Article 12 of the DTAA between India and Singapore. Accordingly, disallowed the said expenditure for violation of non-deduction of TDS u/s. 40(a)(i) of the Act. 14. The DRP in its directions vide para 24.2 referred to the discussion made by the DRP in A.Y. 2012-13 in assessee's own case. We note that the DRP while dealing the issue in A.Y. 2012-13 placed reliance in the case of AMD Research & Development Center India Pvt. Ltd. reported in TS-649- ITAT-2014 (HYD) which held the payment made to the parent company with the serv ..... X X X X Extracts X X X X X X X X Extracts X X X X
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