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TMI Blog2023 (3) TMI 1020X X X X Extracts X X X X X X X X Extracts X X X X ..... aterial/information the CIT(A) was not justified in confirming the additions under Section 68 of the Act in respect of unsecured loan. Accordingly, we delete the addition. Assessee appeal is partly allowed. - ITA No. 5313/MUM/2016 - - - Dated:- 15-11-2022 - SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER AND SHRI RAHUL CHAUDHARY, JUDICIAL MEMBER For the Appellant/Assessee : Shri Jitendra Singh For the Respondent/Department : Ms. Samruddhi D Hande ORDER Per Rahul Chaudhary, Judicial Member: 1. By way of the present appeal the Appellant/Assessee has challenged the order, dated 05.04.2016, passed by the Ld. Commissioner of Income Tax (Appeals)-55, Mumbai [hereinafter referred to as the CIT(A)‟] for the Assessment Year 2005-06, whereby the Ld. CIT(A) had partly allowed the appeal against the Assessment Order, dated 23.12.2008, passed under Section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act‟). 2. The appeal was filed with the application seeking condonation of delay in filing the appeal on the ground that the Director of the Appellant-Company at the relevant time was outside India and therefore, could not execute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AEs while sales of INR 22.49 Crores, being balance 57.2% of the total sales, were made to Non-AEs. According to the TPO, the gross margin on cost earned in case of sales made to non-AEs was 16.68% which was more than the gross margin on cost (computed at 11.45%) in case of sales made to AEs. Therefore, the Appellant was asked to show cause why transfer pricing adjustment of INR 1,79,98,287/- by taking margin of 16.68% on cost of sales made to AEs should not be taken. Vide letter, dated 24.10.2008, the Appellant replied to the aforesaid show cause notice stating, inter-alia, that the difference in margin on sales made to AEs in USA and Non-AEs in Europe was on account of difference in market conditions and the terms of the contract. Since the AE of the Appellant in USA incurs expenses for promoting the products and assumes the risk in respect of the rejected products, the European customers of the Appellant do not assume such risk or incur such expenditure, therefore, lesser margin the charged by the Appellant on the sales made to AE in USA. The TPO, however, not being satisfied with the aforesaid contentions of the Appellant, proceeded to recommend upward transfer pricing adjus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) on account of typographical mistake by which amount of INR 3,00,000/- was typed as INR 30,00,000/-. Further, the CIT(A), relying upon additional evidence filed by the Appellant, treated the loan of INR 22,50,000/- from Shri Pravin Kumar Jain and loan of INR 5,00,000/- from Jain International as genuine and deleted the additions in respect of the same. Thus, addition of INR 54,50,000/- out of total addition of INR 72,50,000/- made by the Assessing Officer under Section 68 of the Act was deleted by the CIT(A). 3.6. Not being satisfied with the relief granted by the CIT(A), the Appellant has preferred the present appeal raising grounds reproduced in paragraph 2 above against the order of CIT(A) confirming the transfer pricing addition of INR 1,79,98,287/- and confirming the addition of INR 18,00,000/- under Section 68 of the Act. Ground No. 1 to 1.2 4. Ground No. 1 to 1.2 pertain to order of CIT(A) confirming the transfer pricing addition of INR 1,79,98,287/-. 5. The Ld. Authorised Representative for the Appellant reiterated the submission made before Assessing Officer and CIT(A) explaining the difference in the margin in respect of sales made to AE‟s and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment year before us. For Assessment Year 2005-06, the TPO has adopted same approach as adopted in the Assessment Year 2004-05 with stands rejected by the above order of the Tribunal. The Tribunal had, for the immediately preceding Assessment Year 2004-05, accepted the contentions raised on behalf of the Appellant and remanded the issue back for fresh de-novo adjudication. Therefore, we find merit in the contentions of the Ld. Authorised Representative for the Appellant that for the Assessment Year 2005-06 the issue relating to transfer pricing adjustment can also be remanded back. Accordingly, keeping in view the facts and circumstances of the case and the abovesaid order of the Tribunal in the case of the Appellant for the Assessment Year 2004-05, we deem it appropriate to remand this issue to the file of TPO/AO for de-novo determination of ALP after giving the Appellant reasonable opportunity of being heard. Accordingly, in view of the aforesaid directions, the transfer pricing adjustment of INR.1,79,98,287/- is set aside and Ground No. 1 to 1.2 are allowed for statistical purposes. Ground No. 2 to 2.1 8. Ground No. 2 pertain to addition of INR 18,00,000/- made b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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