MUNICH RE INDIA SERVICE P.LTD,MUMBAI vs. ASST CIT CIR 6(3), MUMBAI

“1. On the facts and in the circumstances of the case and an law, the Commissioner of income Tax (Appeals)-57, Mumbai (CIT(A)) has erred in partly upholding the order passed by the Assessing Officer

2. Transfer Pricing Adjustment: INR 2,72,02,647/- On the facts and in the circumstances of the case and in the law, the learned CIT(A) erred in confirming the adjustment of INR 2,72,02,647/-made by the Assessing Officer by virtue of re-computation of arm's length price of international transactions vide his impugned order dated January 20, 2015 after giving a partial relief for the comparables considered by the AO.

3 Erred in rejection of Transfer Pricing Documentation maintained under Rule 10D of the Income Tax Rules, 1962 (“the rules”).

The Ld CIT(A) cited in confirming the action of the Ld TPO for rejection of comparable companies identified by the Appellant based on methodical search strategy as maintained under Rule 10D of the Rules, thereby violating the provisions of Rule 108(2) of the Rules.

4 . Violation of provisions of Rule 10 B2) and Rule 10 B(3) and arbitrary rejection of comparables selected by the Appellant 4.2. On the facts in circumstances of the case and in law, the Ld TPO as well as the CIT(A) further erred in not appreciating that the above action is contrary to the provisions of Rule 10B(2) & 10B(3) of the Rules

5. Erred in applying arbitrary search filter.

On the facts and the circumstances of the case and in law, the Ld. CITIA) erred in upholding/confirming the action of the TPO for the application of arbitrary filters for selection/rejection of companies;

On the facts and in the circumstances of the case and in law, the LA CIT(A) erred in upholding/conforming the action of the TPO by cherry picking the comparables about understanding the functions performed, assets employed and risks assumed by the assessee vis-à-vis the comparables selected by ld TPO.

On the facts and in the circumstances of the case and in law, the Ld. CIT(A) end in upholding/confirming the action of the TPO by not granting the working capital adjustment as mandated in Rule 10B(3) of the Rules.

The Ld. CIT(A) has erred in confirming to the actions of the Ld. TPO, wherein he mechanically relied upon the DRP directions given for AY 2008-09 and the search carried on for the previous years, without considering the comparable companies from an independent perspective.

The Ld. CIT(A) erred in confirming the action of the Ld. TPO in considering the incorrect margin computed of a comparable company (i.e. Maple eSolutions Limited)

14 The Ld CIT(A) erred in confirming the action of AO in disallowing the amount of lease charges The Learned CFT (A) has erred in confirming the action of AO in disallowing the amount of lease charges of INR 2,73,850/- paid by the appellant on account of purchase of car on lease.

Without prejudice to the above ground, the learned CIT(A) ought to have allowed depreciation as per the provisions of Income tax Act, 1961 in case the amount paid on lease charges is considered to be in the nature of capital asset.

16 Erred in initiating penalty proceedings The Ld. CIT(A) erred in confirming action of Ld. AO wherein it was proposed to innate penalty s/s 271(1)(c) of the Act, in his assessment order, in the absence of concealment of income or fishing of inaccurate particulars on part of the Appellant. The adjustment was merely on account of difference of opinion, besides, the Appellant has neither defaulted in complying with the procedural requirements nor understated the income fraudulently.”

Order pronounced in the open court on 02.11.2022.