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TMI Blog2023 (5) TMI 107X X X X Extracts X X X X X X X X Extracts X X X X ..... t as in the draft assessment order. Respectfully the above decision of the coordinate Bench, we quash the TP adjustment and hold the legal contentions raised in favour of the assessee. Since the TP adjustment is quashed on the basis of legal issue, we are not adjudicating the grounds raised with regard to TP adjustment on merits leaving them open. It is ordered accordingly. Disallowance of difference in 26AS - difference between the amount remitted as per Form 26AS and the revenue declared by the assessee in the Profit Loss account - HELD THAT:- AR submitted that the difference between the revenue as per Form 26AS and the P L account were reconciled and made the relevant submissions before the DRP (Ground No.10 in Form 35) and these submissions have not been considered on merits by the lower authorities and therefore prayed for remitting this issue back to the AO. DR did not have any objection. Accordingly, we remit this issue back to the AO to consider the reconciliation submitted by the assessee and decide the issue in accordance with law after giving reasonable opportunity of being heard. This ground is allowed for statistical purposes. Disallowance of TDS credit - HELD THAT:- W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... while passing the draft assessment order made addition towards difference in the revenue between Form 26AS and the profit and loss account of the assessee to the tune of Rs.1,03,61,430. The AO also denied the benefit of credit of TDS to the tune of Rs.31,69,801 to the assessee in the draft order. The assessee filed its objections before the DRP. The DRP issued directions directing the TPO/AO to rework the transfer pricing adjustment with respect to international transactions pertaining to Engineering Design services segment and sale of finished goods to AE. The DRP confirmed the additions made by the AO on the corporate tax front. The AO passed the final assessment order against which the assessee is in appeal before the Tribunal. 5. The assessee raised 8 grounds contending the TP adjustment on merits. The assessee also raised 2 grounds with regard to corporate tax disallowance. The assessee raised one additional ground contending the TP adjustment on the legal ground that the final assessment order is not in accordance with the DRP directions as per the provisions of section 144C(10) r.w.s. 144C(13) and hence liable to be quashed. 6. During the course of hearing, the ld. AR submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions with respect to transfer pricing adjustment pertaining to Engineering design services, directed the AO/TPO to exclude certain comparable companies selected by the TPO in the final set. Further, it also directed the TPO to rework the transfer pricing adjustment with respect to the international transaction pertaining to sale of finished products to AEs. 12. The ld. AR submitted that the AO passed the final assessment order which is not in conformity with the DRP directions. The relevant paragraph of the final assessment order is reproduced herein below:- 2.3 Accordingly, a draft assessment order was passed u/s 143(3) rws 144C(1) of the I. T. 1961 on 28.03.2016 in which addition of Rs. 3,29,82,771/- was made in accordance with the provisions of section 92C(4) and section 92CA(4) of the Income-tax Act, on this issue. The assessee aggrieved by the Draft Assessment order dated 28.03.2016, filed objection before Draft Resolution PanelIT( 2, Bengaluru. The DRP vide their order dated 22/12/2016 did not give any relief to the assessee on this issue. 13. The ld. AR submitted that the AO retaining the same TP adjustment without considering the directions of the DRP in final assessment o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4.22% 17.72% 18. Accordingly, the TPO made the following adjustment:- International transaction Software service provision Rs.16,32,073 Equivalent cost base Remuneration is Cost-plus 7.5% Rs.15,18,207 Arms length margin @ 124.22% of cost Rs.18,85,917 Adjustment Rs.2,53,844 19. The TPO also arrived at the ALP of reimbursement of expenses as NIL on the ground that the assessee failed to submit actual cost paid by AE and therefore made an adjustment of the entire amount of reimbursement of expenses at Rs.2,48,45,593. The consolidated TP adjustment made by the TPO is as given below:- Head Adjustments Sale of finished products to AE Rs. 78,83,334 Engineering service provision Rs 2,53,844 Reimbursement of expenses Rs. 2,48,45,593 TOTAL Rs. 3,29,82,771 20. The AO passed the the draft assessment order incorporating the above adjustment of Rs.3,29,82,771. Against the objections raised by the assessee the DRP, with regard to the comparables in Engineering Design services segment, held that :- 5.2 However, the specific objections of the assessee regarding the comparables selected by the TPO were examined. As regards Holtec Consulting Private Limited, the assessee claims that it is functionall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment order retained the TP adjustment at the same amount of Rs.3,29,82,771 without considering the above directions of the DRP. The relevant extract from AO s final assessment order in para 2.3 is extracted in the earlier part of this order. From a perusal of these facts, it is clear that the final assessment order passed by the AO is not in accordance with the directions of the DRP. We notice that the coordinate Bench of the Tribunal in the case of Toyota Tsusho P. India Ltd. v. JCIT, IT)TPA No.175/Bang/2022 dated 9.9.2022 had considered a similar issue and held that 12. We have considered the rival submissions and perused the material on record. We notice that the DRP in para 5.1.1 to 5.1.4 as ex extracted above has given clear directions to the TPO to re-examine the inclusion of M/s. Archroma India Pvt Ltd and M/s. Tarak Chemicals Limited and has also directed for the exclusion of M/s. Sirea India Private Ltd. This would mean that the TP adjustment should be recomputed and thus should undergo change. This is supported by the fact that the jurisdictional AO in the OGE to the directions of the DRP dated 28.2.2022 has revised the TP adjustment to Rs.31,38,49,565. However, in the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irected to deleted the addition of Rs.1,03,61,430/-. 11. On the facts and circumstances of the case and in law, the Learned AO, under the directions issued by Hon'ble Dispute Resolution Panel('DRP'), erred in proposing to make an addition of Rs.31,69,801/- on account of disallowance of TDS credit claimed with respect to income offered to tax in different assessment years. Disallowance of difference in 26AS 25. During the course of hearing, the AO noticed that there is a difference between the amount remitted as per Form 26AS and the revenue declared by the assessee in the Profit Loss account. The AO proceeded to make an adjustment towards the difference of Rs.1,03,61,430. On further objections raised, the DRP sustained the disallowance by stating that the assessee is not at liberty to offer income assessable in a particular year in any subsequent year as per its convenience. 26. In this regard, the ld. AR submitted that the difference between the revenue as per Form 26AS and the P L account were reconciled and made the relevant submissions before the DRP (Ground No.10 in Form 35). The ld. AR submitted that these submissions have not been considered on merits by the lowe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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