9911796707
TMI Blog2023 (4) TMI 1039X X X X Extracts X X X X X X X X Extracts X X X X ..... ntered into international transactions with its Associated Enterprises (AE's). Accordingly, a reference was made to TPO to determine Arm's Length Price (ALP) of the international transactions entered by the assessee with its AE's. The TPO vide order dated 30.01.2013 passed u/s 92CA of the Act proposed an adjustment of Rs.4,96,10,800/- to the income of the assessee. AO, thereafter, passed assessment order u/s 144C of the Act dated 21.05.2013 and determined the total income at Rs.4,96,35,422/-. 4. Aggrieved by the order of AO, assessee carried the matter before CIT(A) who vide order dated 15.01.2018 in Appeal No.153/2013-14 granted substantial relief to the assessee. Aggrieved by the order of CIT(A), Revenue is now in appeal and has raised the following grounds: "1. The Ld. CIT(A) has erred on facts and in the law in allowing the working capital adjustment to the account for difference in the working capital position of the appellant and the comparable companies for the period under consideration. 2. The Ld CIT has erred in deleting some comparables selected by the TPO only on the basis that these comparables have been rejected by the TPO himself in the subsequent years thereby ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emonstrate with evidence that the difference in working capital deployed is making a difference in the margin earned by the assessee and the comparables. He further noted that out of the three components of working capital namely payables, receivable and inventory only one component is effected on account of transactions with the Associated Enterprises (AEs) i.e. receivable. TPO, therefore, was of the view that to allow working capital adjustment on all the three components even though transactions with the Associated Enterprises (AEs) effect only one of them was not justified. He accordingly, denied the working capital adjustment to the assessee. 7. Aggrieved by the order of AO, assessee carried the matter before CIT(A). Before CIT(A), it was inter alia submitted that the TPO has granted working capital adjustment to the assessee in A.Ys. 2010-11 & 2011-12. Before CIT(A) assessee also relied on the various decisions cited by the CIT(A) in his order. CIT(A) after considering the submissions made by assessee and relying on the order of the Hon'ble Delhi Tribunal in the case of Sony Mobile Communications International AB vs. Deputy Director of Income-tax [2016] 69 taxmann.com 404 he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he facts of the case in the year under consideration and that of the earlier year. Revenue has also not placed any material on record to demonstrate that the decision relied upon by the CIT(A) has been stayed/set aside/overruled by higher judicial forum. In such a situation, we find no reason to interfere with the order of CIT(A) and thus the ground of Revenue is dismissed. 12. Ground No.2 is with respect to the exclusion of comparables. 13. The assessee in the TPO study has selected certain comparable companies. The TPO had rejected some of the comparables selected by the assessee and had included fresh comparables for the purpose of determination of Arm's Length Price (ALP). Assessee had objected to the comparables that were included by TPO. TPO, however, did not accept the objection raised by assessee and proceeded to determining the Arm's Length Price. 14. Aggrieved by the order of TPO, assessee carried the matter before CIT(A). CIT(A) at para 7.12 (pages 23-26) of his order has tabulated the assessee's contentions with respect to the comparables selected by TPO and the TPO's remark. After considering the assessee's contentions and TPO's remark, CIT(A) noted that TPO has no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rable to the appellant. In almost all the cases there an objection of functional dissimilarity and before drawing adverse inference based on these comparable it was incumbent upon him to address the objections raised. Furthermore, as mentioned above the rejection of these comparables in the accept/reject matrix has been accepted by the TPO in prior and subsequent years. 7.16 It is seen from the facts discussed above that some of the objections raised by the appellant before the TPO have not been dealt with during the course of proceedings before the TPO. It is also evident from the facts recorded above that similar issue of comparables was also examined by the TPO in the assessment proceedings for AY 2010- 11, 2011-12, 2012-13 and 2013-14 wherein the aforesaid comparables were considered and based on the facts of each comparables some of the comparables were rejected in all the 4 subsequent years. 7.17 Keeping in view the aforesaid facts, it is held that the comparables which were rejected in all the 4 subsequent years was not be adopted for arriving at Arm's Length Margin in the current year. Further, as pointed out above out of the 4 comparables adopted by the appellant in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t involving job work. AO also relied on the decision of Hon'ble Bombay High Court in the case of Sarvodya Printing Press vs. State of Maharashtra (1994) 93 STC 387 to hold that the contract involved job work and, therefore, assessee was liable to deduct TDS. AO noted that assessee had violated the provision of Section 194C of the Act by not deducting TDS. He accordingly, held that on account of non deduction of TDS the expenditure incurred for packing material was not allowable in view of the provisions of Section 40(a)(ia) of the Act. He, accordingly, disallowed the amount of Rs.4,70,71,208/-. 22. Aggrieved by the order of AO, assessee carried the matter before CIT(A). CIT(A) by following the decision of the Tribunal in assessee's own case and noting that the facts in the year under consideration were identical to that of earlier years, deleted the addition made by AO. Aggrieved by the order of CIT(A), Revenue is now before us. 23. Before us, Learned DR took us to the findings of AO and placing reliance on the decision noted by AO in the case of Sarvodya Printing Press (supra) and decision in the case of State of Tamil Nadu vs. Anandam Viswanathan 1989 SCR (1) 301 submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
