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TMI Blog2023 (5) TMI 943X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 28th November, 2018 is bad in law. 1.2 That the additions/disallowance made by Ld. AO are wholly illegal, untenable and on erroneous grounds. Adjustment of Rs. 31,34,18,824/- in respect of sale agri-commodities to AEs Incorrect application of TNMM 2. That the Ld. TPO/DRP and consequently the Ld. AO have grossly erred in making a transfer pricing adjustment of Rs.31,34,18,824/- by incorrectly applying the Transactional Net Margin Method (TNMM). Treatment of foreign exchange loss 3. The Ld TPO/DRP and consequently the Ld. AO have grossly erred in law and on facts and circumstances of the case by treating the foreign exchange loss/gain as operating item while computing the PLI of assessee and comparables, completely disregarding that: 3.1 Such foreign exchange loss has arisen from the reinstatement of long term advances which are within the domain of financing activities. 3.2 Those aforesaid advances are in nature of long term financing extended by holding company to its subsidiary and hence are in the capital filed. 3.3 Foreign exchange loss/gain cannot have a different character from a transaction to which it pertains i.e. financing in nature. 3.4 Safe harb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee. Addition for emplyees' contribution to PF/ESIC 9. The Ld. AO has erred in law and on facts and circumstances of the case in proposing and Ld. DRP erred in upholding an addition of Rs. 1,07,214/- on account of late payment of employee's contribution towards Provident fund/Employee State Insurance Corporation. Non-allowance of brought forward losses 10. The ld. AO has erred in law and on facts and circumstances of the case in not allowing the set-off of the brought forward looses and unabsorbed depreciation amounting got Rs. 90,74,54,523/- and Rs. 44,44,036/- respectively and consequently raising an unnecessary /infructuous demand of Rs. 44,22,850/-. 11. That the Ld. AO has erred in law in computing the interest u/.s 234A and 234B on the alleged tax payable. 12. The at the Ld. AO has erred in law in initiating penalty proceedings u/s. 271(1)(c) alleged concealment of income. 13. That each ground appeal is independent and without prejudice to other grounds appeal raised herein." 02. Brief facts of the case shows that assessee is a company engaged in trading of comedy, it filed its return of income on 30/11/2014 declaring a loss of Rs. 361,072,457/-. Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee with respect to the bundled approach and held that cup method is applied on each transaction. The learned TPO also noted that in assessment year 2012 - 13 the assessee has submitted that the rates adopted by the Indian customs official for export of rice should be considered for cup analysis as the same would be reliable. He further held that TIPS database is of Indian custom officials that was relied by the assessee himself and this year assessee is objecting to that. Thereafter the learned transfer-pricing officer applying that database computed the arm's-length price taking the price transacted by the assessee for each day and accordingly made an adjustment of Rs. 7,50,04,711 with respect to the trading activities. He made an adjustment of Rs. 67,618,218 on account of sale of non-basmati rice and Rs. 64,30,518 in respect of sale of basmati rice to Dubai entity and sale of to the holding company of Rs. 955,975/-. 06. He also found that the assessee has outstanding receivable from Dubai entity of Rs. 357,444,143 that is a transaction of capital financing and therefore interest is required to be benchmarked on the outstanding receivable. After considering the ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 313,418,824/- on account of transfer pricing adjustment, Rs. 107214 on account of late payment of provident fund and provision for doubtful debts of Rs. 61,477,582 were repeated determining the total income of the assessee at Rs. 13,931,163/-. Assessee is aggrieved with that and has preferred this appeal. 011. Despite notice, none appeared On behalf of the assessee on last several occasions. The earlier letter of authority was also withdrawn. The notices sent to the assessee through post were also returned with remark 'left'. Therefore, we do not have any other alternative but to decide the appeal on the merits of the case as per information available on record. 012. The learned departmental representative vehemently supported the order of the learned dispute resolution panel and the learned TPO with respect to the transfer pricing adjustment. It was submitted that assessee is receiving huge advances from its AE and incurring cost of Forex as well as material sold. Therefore, forex loss is operating loss only. He referred to direction of LD DRP to show the various scenarios and why LD DRP held it to be inextricably linked with sales. On the issue of late payment of pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... forex losses incurred by the assessee are closely interlinked for this reason. Assessee in the sale price also giving AE benefit of forex fluctuation also. In view of this, we do not find any infirmity in the direction of the LD DRP by including forex loss in the PLI computation of Assessee. Thus, Ground no 3 is dismissed. 016. There is no justification available with us with respect to computation of PLI or Search process of the assessee. In absence of any argument before lower authorities and any representation before us, we dismiss ground no 4, 5 and 6 of the Appeal. 017. Ground no 2 is combines ground of TP adjustments, hence it is also dismissed. 018. Grounds of appeal are numbered incorrectly. There is no ground no 7. 019. Ground no 8 is with respect to late payment of dues of employees contribution as per respective due dates of the respective Act. In view of the decision of Honourable Supreme court in case of Checkmate solutions Services Limited this issue is to be decided against the assessee and hence Ground no 8 is dismissed. 020. Ground no 9 is provision of bad and doubtful debts which is not writing off actual debts. Therefore it does not fulfill the condition of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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