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Income Tax Appellate Tribunal, ‘D’ BENCH, CHENNAI
Before: SHRI G. MANJUNATHA & SHRI RAHUL CHAUDHARY
आयकरअपीलीयअिधकरण,‘ डी’ �ायपीठ,चे�ई IN THE INCOME TAX APPELLATE TRIBUNAL ‘D’ BENCH, CHENNAI �ी जी मंजूनाथा, लेखा सद ,एवं �ी रा#ल चौधरी, �ाियक सद के सम% BEFORE SHRI G. MANJUNATHA, ACCOUNTANT MEMBER AND SHRI RAHUL CHAUDHARY, JUDICIAL MEMBER आयकरअपीलसं./I.T.A No.:1841/CHNY/2017 िनधा&रणवष&/Assessment Year: 2013 - 2014
M/s. Precision Hydraulics Private Limited, No.83 & 84 & 117, SIPCOT Industrial Complex, Gummidipoondi Chennai – 600 102 …………… अपीलाथ(/Appellant PAN: AADCP 7054M Vs. The Assistant Commissioner of Income Tax - Corporate Circle 5(2), 4th Floor, Aayakar Bhawan, No.121, M.G. Road, Nungambakkam, …………… )*थ(/Respondent Chennai – 600 034 Appearances: For the Appellant/Assessee : Mr. T. Banushekar, C.A For the Respondent/Department : Dr. S. Palani Kumar, CIT-DR Date of conclusion of hearing : 30.05.2022 Date of pronouncement of order : 02.06.2022 आदेश /O R D E R Per Rahul Chaudhary, Judicial Member:
By way of the present appeal the Appellant/Assessee has challenged the final assessment order, dated 02.06.2017, for the Assessment Year 2013-2014 passed under Section 143(3) read with Section 92CA and Section 144C(13) of the Income Tax Act, 1961 [hereinafter referred to as ‘the Act’] in pursuance of the directions issued by the Dispute Resolution Panel (DRP) on 24.04.2017.
I.T.A. No.1841/CHNY/2017 Assessment Year :2013 - 2014
The brief fact of the case are that the Appellant, a private limited
company, was engaged in the business of manufacturing hydraulic
cylinders and components during the relevant previous year. The
Appellant is a wholly owned subsidiary of Precision Hydraulic Cylinders
Inc. USA. During the relevant previous year the Appellant entered into
the international transactions with the Associated Enterprises which can
be classified as under:
S.No. Nature of Transaction Amount (INR) 1. Purchase of Tubes, Rods and Spares 3,11,88,388/- 2. Sale of Cylinder components 17,47,16,018/- 3. Interest on external commercial borrowings 32,18,176/- 4. Outstanding payables 17,44,53,373/- 5. Outstanding receivables 13,11,18,172/- Total 51,46,94,127/-
The Appellant filed return of income declaring ‘Nil’ income after adjusting
the brought forward business loss of INR 11,26,753/- and unabsorbed
depreciation of INR 352,389/-. The case of the Appellant was selected
for scrutiny and during the assessment proceedings, reference was
made to the Transfer Pricing Officer (TPO) under Section 92CA(1) of the
Act for the determination of the arm’s length price. The TPO, vide order
dated 31.10.2016, proposed upwards transfer pricing adjustment of INR
1,48,33,077/-, inter alia, by rejecting the segmental data submitted by
the Appellant. Accordingly, Draft Assessment Order, dated 23.12.2016,
was passed by the Assessing Officer proposing an addition of INR
15,315,803/-, comprising of transfer pricing adjustment of INR
14,833,077/- and corporate tax additions of INR 482,726/-.
The Appellant filed objections against the Draft Assessment Order
before the DRP contesting the adjustment proposed by the Assessing
I.T.A. No.1841/CHNY/2017 Assessment Year :2013 - 2014
Officer/TPO. The DRP, vide order dated 24.04.2017, directed the TPO
to compute the transfer pricing adjustment by adopting entity level
margins. Based on the directions of the DRP, Assessing Officer passed
the Final Assessment Order, dated 02.06.2017 which has been
challenged by way of the present appeal.
At the outset, the Ld. Authorized Representative of the Appellant
appearing before us submitted that the matter can be remanded back to
the file of the TPO for fresh determination in view of the additional
evidences filed by the Assessee before the Tribunal. He submitted that
the segmental data provided by the Appellant before TPO/DRP was
rejected on the ground that the same was revised during the course of
assessment proceedings and was not audited. The Appellant has filed
audited segmental financials statement as additional evidence before
the Tribunal. In view of the aforesaid the Ld. Authorized Representative
of the Appellant submitted that the matter be remanded back to the
TPO. In response, the Ld. DR submitted that all the issues be left open
for fresh determination of arm’s length price by the TPO in case the
matter is remanded to the file of the TPO.
We note that TPO/DRP rejected the segmental data provided by the
Appellant and adopted the entity-level margins primarily on the ground
that the data provided was not accompanied by a chartered
accountant’s certificate or report and was, therefore, not a reliable. In
view of the submission of the parties recorded hereinabove, we deem it
appropriate and in the interest of justice to remand the matter to the file
of the TPO for determination of arm’s price afresh after taking into
I.T.A. No.1841/CHNY/2017 Assessment Year :2013 - 2014 consideration the audited segmental financials statement filed by the Appellant. We clarify that we have not expressed any views about the suitability or otherwise of the segmental data furnished by the Appellant. The TPO would be free to examine the same while determining the arm’s length price. In view of the aforesaid directions, the present appeal is disposed.
In result, in terms of paragraph 7 above, the present appeal is allowed for statistical purposes.
Order pronounced in the court on 02.06.2022 at Chennai.
Sd/- Sd/- (जीमंजूनाथा) (रा#लचौधरी) (G. MANJUNATHA) (RAHUL CHAUDHARY) लेखासद /ACCOUNTANT MEMBER �ाियकसद एवं /JUDICIAL MEMBER चे�ई/Chennai, िदनांक/Dated, 2nd June, 2022 IA, Sr. PS आदेशकी)ितिलिपअ-ेिषत/Copy to: 1. अपीलाथ(/Appellant 2. )*थ(/Respondent 3. आयकरआयु/ (अपील)/CIT(A) 4. आयकरआयु//CIT 5. िवभागीय)ितिनिध/DR 6. गाड&फाईल/GF