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TMI Blog2019 (11) TMI 1810X X X X Extracts X X X X X X X X Extracts X X X X ..... l back provision for years under consideration. However, circumstances which provides for applying the rule, needs to be analysed. The transaction must be identical in terms of functions, risks assumed regarding international transaction must be same. Having regards to above discussion, we find it necessary to set aside the issue to Ld. TPO/AO to verify FAR of assessment years for which APA was entered and assessment years under consideration. Ld. AO/TPO shall compare international transaction for years under consideration and terms of APA and to compute ALP of transaction in accordance with law. Under such circumstances, additional ground raised by assessee becomes academic and therefore, we are not adjudicating the same. Appeals allowed for statistical purposes. - A.K. Garodia, Member (A) and Beena Pillai, Member (J) For the Appellant : Neera Malhotra, CIT, DR. For the Respondents : Nageshwar Rao, Advocate. ORDER BEENA PILLAI, MEMBER (J) 1. Present appeals have been filed by assessee as well as revenue against order passed by Ld. CIT(A) dated 29/05/14 for assessment year 2009-10 and order dated 30/12/2014 passed by Ld. DCIT Circle 3(1)(2) for asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in facts, by selecting companies based on unreasonable comparability criteria: a. Rejection of companies whose data for FY 2008-09 was not available; b. Rejection of companies with revenue was below Rs. 1 Crore; and c. Rejecting certain comparable companies identified by the Appellant on the ground that the comparables were having different accounting year (other than March 31 or companies whose financial statements were for a period other than 12 months) 9. Without prejudice to our contention that TNMM should not be considered as the most appropriate method, the learned TPO and the learned AO erred, in law and in facts, in not providing the benefit of working capital adjustment by adjusting the net margins of the comparable companies; 10. The learned CIT(A) has erred (alongwith the learned AO), in law, and in facts, in levying interest under sections 234B an 234C of the Act respectively. 11. The learned IT(A) has erred alongwith the learned AO, in law and in facts, in initiating penalty proceedings u/s. 271(1)(c) of the Act.. The appellant submits that each of the above grounds is independent and without prejudice to one another. The appellant caves leave t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant for determination of ALP. 8. Without prejudice to our contention that TNMM should not be considered as the most appropriate method, the learned TPO and the learned AO erred, in law and in facts, by selecting companies based on unreasonable comparability criteria: Rejection of companies whose data for FY 2008-09 was not available; Rejection of companies with revenue was below Rs. 1 Crore; and Rejecting certain comparable companies identified by the Appellant on the ground that the comparables were having different accounting year (other than March 31 or companies whose financial statements were for a period other than 12 months) Without prejudice to our contention that TNMM should not be considered as the most appropriate method, the learned TPO and the learned AO erred, in law and in facts, in not providing the benefit of working capital adjustment by adjusting the net margins of the comparable companies; Payment of SAP charges transaction 10. The learned TPO and the learned AO have erred, in law and in facts, by holding that the payments have been made in relation to the implementation of SAP ERP platform and by overlooking the fact the payments are in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of working capital built in the profit margin. 4. On the facts and in the circumstances of the case the Dispute Resolution Panel is not justified in directing the TPO to adjust the profit margin of the assessee for the entire amount of advances received from AE on the ground that there is time value for money. 5. For these and other grounds that may he urged at the time of hearing, it is prayed that the directions of the Dispute Resolution Panel in so far as it relates to the above grounds may he reversed. 6. The appellant craves leave to add, alter, amend and/or delete any of the grounds mentioned above. CO No. 74/B/2017 (Assessment year 2010-11) 1. The directions of the Dispute Resolution Panel are opposed to law and facts of the case. 2. On the facts and in the circumstances of the case, the Dispute Resolution Panel erred in directing the TPO/AO to exclude the comparable M/s. Energy Development Co. Ltd., by holding that the same is not functionally comparable to the assessee company without appreciating the fact that in assessee's own case for AY 2009-10, CIT(A) had upheld the selection of this company as a comparable company. 3. On the facts and in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esto Germany, amounting to Rs. 3,70,71,906/-. Ld. TPO observed that assessee analysed the transaction by using CUP method, which was rejected by Ld. TPO. Ld. TPO disallowed the same by holding that assessee did not show how unrelated parties would charge in similar circumstances, and that in assessee's case as per the agreement entered with its AE, SAP charges was to be paid at the time of implementation, whereas assessee paid such charges every year. 2.2. Assessee also raised additional ground in respect of methods adopted by learned TPO, while computing ALP for trading segment which reads as under: ADDITIONAL GROUNDS OF APPEAL In addition to the grounds of objections raised before the Honble Bench, the Petitioner hereby wishes to submit the following additional grounds after ground No. 12: Ground No. 13: The learned CIT(A)/AO/TPO has erred, in law and in facts, by rejecting Ashco Industries Limited, Bombardier Transportation India Limited and K. Dhandapani Co. Limited adopted as comparable by the Appellant for determination of ALP. Ground No. 14 The learned CIT(A)/AO/TPO has erred, in law and in facts, by upholding the inclusion of Energy Development Compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. vs. ACIT reported in (2019) 101 Taxmann.com 6. She submitted that issue may be set aside to Ld. AO/TPO for verifying FAR analysis of assessee for year under consideration vis- -vis. years covered under APA. 3.1. We have perused submissions advanced by both sides in the light of records placed before us. 3.2. We have gone through the decisions relied upon both sides copies of which have been placed on record. Amongst the decisions relied upon by Ld. AR, it is observed that coordinate benches of the Tribunal analysed comparables and then concluded that margin adopted in APA was within is permissible range with margin computed by assessee therein. Other decision was on the issue where, transactions have been considered at a particular margin under APA, and separate adjustment by TPO determining ALP of same transaction was held to be contrary. In the decision relied upon by Ld. AR of coordinate bench of this Tribunal, issue was remanded back to Ld. AO/TPO. We are therefore unable to agree that contention by assessee stand on the issue of roll back squarely covered by decisions relied upon by Ld. AR. 3.3. However, in decision relied upon by Ld. CIT DR, it is observed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e even the rules provide that if the International Transactions are same in the year of APA and in the past year than both the parties, assessee and CBDT may agree for applying the agreements contained in APA agreed. ** ** ** Needless to say that Ld. TPO/AO shall give due weightage to the Advance Pricing agreement signed by the assessee with CBDT on other issues also (other than the issue of selection of tested party) for determination of ALP and in case of any divergent view, the assessee shall be granted an adequate opportunity to substantiate any claim/arguments on the manner of determination of ALP. 4. In the case of RBS India Development Centre Pvt. Ltd. v. ACIT (ITA No. 5538/Del/2010), the TPO did not take into consideration other income which was in the nature of operating income. The AR placed the APA before the Hon'ble Bench and pointed out that the other income was part of operating income as per the terms of the Agreement. The issue was restored back to the file of the Ld. AO/TPO for verification of the assessee's claim. 6. Considering the above, we are of the opinion that the matter should be remanded to the file of AO/TPO, as the case may be, for t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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