M/S. EATON POWER QUALITY PRIVATE LTD.,,PUNE vs. DEPUTY COMMISSIONER OF INCOME-TAX,,

We have heard the rival submissions through Virtual Court and gone through the relevant material on record. It is noted that the DRP relied on its direction for the immediately preceding assessment year for granting seal of approval to the transfer pricing adjustment. Such earlier assessment year came up for consideration before the Tribunal. By its order dated 19-11-2018, the Tribunal in AO/TPO for a fresh determination of the ALP. In reaching this conclusion, the Tribunal also relied on a Coordinate bench decision of the assessee’s sister concern, namely, Eaton Fluid Power Ltd. Vs. ACIT. Relevant discussion has been made at para 5 of the order.

Ground nos. 6 and 7 are against the addition of Rs.92,58,784/- made u/s.37(1) of the Act in respect of the Management fee (Corporate cost allocation). The assessee incurred such expenses to its another Indian sister concern, namely, Eaton Technologies Private Limited. The AO required the assessee to demonstrate the basis for cost allocation of Rs.92.58 lakh and also the factum of receipt of services. The assessee could not prove its point of view to the satisfaction of the AO. He, therefore, made the disallowance u/s.37(1) of the Act. The DRP also did not allow any reprieve to the assessee, which led to the making of the addition in the impugned order.

We have heard the rival submissions and gone through the relevant material on record. The AO has made out a case that the assessee could not evidence receipt of services with necessary documents and hence, the expenditure was not allowable. In addition, the AO also observed that the allocation of costs was not properly proved. On a specific query from the Bench, the ld. AR invited our attention towards invoices which show the incurring of expenses by it under different heads. It is elementary that raising of invoice is one thing and demonstrating the factum of receipt of M/s.Eaton Power Quality Private Limited services is another thing. In the instant case, the assessee has failed to lead proper evidence before the authorities below to prove the receipt of services. The ld. AR contended that the assessee has sufficient evidence to prove the receipt of such services and one more opportunity be granted, which was not seriously objected by the ld. DR. Under these circumstances, we consider it appropriate to set aside the impugned order to this extent and direct the assessee to file such evidence in support of receipt of services to the satisfaction of the AO, who will then examine and decide the issue denovo.

Ground nos. 8 to 11 are against certain claims made before the DRP for the first time for which a direction of re-examination to the AO was not properly complied with.

Factual matrix of these grounds is that the assessee claims that a sum of Rs.17,17,227/- relating to Prior period expenses was inadvertently not reduced from its taxable income at the time of filing of return and also no such claim was made before the AO.

The only other ground about levy of interest u/s. 234A, 234B and 234C is consequential not requiring any specific adjudication.

The assessee has raised an additional ground. The crux of such ground is that the order passed by the Additional Commissioner of Income-tax in the capacity of Transfer Pricing Officer (TPO) is invalid as the order, at the material time, could have been passed only by the Joint Commissioner of Income-tax (JCIT) or Deputy Commissioner of Income-tax (DCIT) or Assistant Commissioner of Income-tax (ACIT). It is observed that similar additional ground was raised in the appeal before the Tribunal by another sister concern of the assessee, viz., Eaton Industrial Systems Pvt. Ltd. for the same assessment year. The Tribunal vide its order dated 25-11-2019 in has dismissed such additional ground on merits. Since the facts and circumstances of the instant additional ground are similar, following the precedent, we dismiss the additional ground.

In the result, the appeal is partly allowed for statistical purposes.