MOOG CONTROLS (INDIA) PRIVATE LIMITED ,BANGALORE vs. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-4(1)(1), BENGALURU

Brief facts of the case are assessee filed return of income for the Assessment Year 2011-12 on 30.09.2011 admitting a total income of Rs.1,21,39,464/-. The return was summarily processed under section 143(1) of the Act on 16.02.2012 which resulted in a refund of Rs.6,01,090/-. Subsequently, the case was selected for scrutiny and notice under sections 143(2) and 142(1) of the Act were issued

The learned TPO while passing the order u/s 92CA of the Act, dt 27.11.2024, computed the ALP by making an adjustment as follows:

The learned AO also disallowed the brought forward loss amounting to Rs.1,83,95,922/-.

On being aggrieved by the additions made by the learned AO, assessee carried the matter before the learned CIT(A). Before the learned CIT(A), assessee raised various grounds regarding the inclusion and exclusion of comparables and working capital adjustment. The learned CIT(A) directed the exclusion of 11 companies as detailed below:

However, the learned CIT(A) did not adjudicate the ground No 2.15 raised by the assessee on working capital adjustment and for the inclusion of certain comparables. The learned CIT(A) partly allowed appeal of the assessee.

On being aggrieved by the Order of the learned CIT(A), assessee is in appeal before us by raising various grounds as detailed below:

At the outset, the learned AR submitted that ground No.2.15 was not adjudicated by the learned CIT(A). Further, he also submitted that learned CIT(A) also did not adjudicate ground No 2.10 during the First Appellate Proceedings. He, therefore, submitted that the issue may be remitted back to the file of the

Per contra, the learned DR relied on the Orders of the Revenue Authorities.

We have heard the rival contentions and perused the written submissions furnished by the assessee. It is an admitted fact that there is no whisper in the Order of the learned CIT(A) regarding the grounds raised by the assessee on working capital adjustment. The main grievance of the assessee is that the learned TPO while computing the ALP has adopted the negative figure of -1.24% while computing the working capital adjustment and has also taken the negative value for all the final set of comparables selected by the TPO. We noticed that the learned CIT(A) has failed to adjudicate ground No.2.15 raised by the assessee on the working capital adjustment which has been computed incorrectly by the TPO. The main grievance of the assessee is that the negative working capital adjustment cannot be done without considering the risk adjustment. Finding merit in argument of learned AR, as prayed by the learned AR, we remand the matter back to CIT(A) on the limited issue of adjudicating the adjustment with respect to working capital, by providing opportunity of being heard to the assessee. Accordingly, the ground raised by the assessee in ground No.2.2 is allowed statistically. Other grounds raised by the assessee being academic needs no adjudication.

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