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16-04-2019, Andritz Hydro, Section 271(1)(c), Tribunal Indore

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4 days 22 hours ago #9168 by amit
Section - 271(1)(c)
Order Date - 16-04-2019
Favouring - Assessee Partly
Court - Tribunal Indore
Appellant - Andritz Hydro Private Limited
Respondent - DCIT
Justice - KUL BHARAT JM & MANISH BORAD AM
Citation - 419Taxpundit203
Appeal No. - ITA No.686&685/Ind/2017
Asstt. Year - 2012-13 & 2013-14

Order

PER : KUL BHARAT, J.M:

These two appeals by the assessee pertaining to the assessment years 2012-13 & 2013-14 are against direction of the Dispute Resolution Panel-2, Mumbai both dated 14.6.17. Similar grounds have been raised in these appeals. Both were taken up together for hearing and were disposed of by way of consolidated order. First we take up appeal pertaining to the assessment year 2012-13 i.e. ITA No.686/Ind/2017. The assessee has raised following grounds of appeal:

“On the facts and circumstances of the case and in law, the Ld. TPO/Ld. AO based on directions of Dispute Resolution Panel (Hon'ble DRP):

1. Erred on the facts and circumstances of the case and in law, by not accepting the economic analysis undertaken by the Appellant which was in accordance with the provisions of the Act read with the Rules for establishing the arm’s length price of the international transactions.

2. Erred in law and in facts in making an adjustment of INR 10,36,034 to the t ansactions related to “Contract revenue from projects”. In doing so, the Ld. TPO/Hon'ble DRP erred in:

a) Inappropriately rejecting the Transaction Net Margin Method (TNMM) as most appropriate method and using Cost Plus Method (CPM) without providing any cogent reasons.

b) Not considering the internal CPM analysis submitted by the Appellant, which was in accordance with the provisions of the Act read with the Rules and the internationally accepted principles.

c) Applying CPM on a project-by-project basis, despite agreeing to various functional and risk differences between individua project, which would lead to unreliable results when compared on project-by-project basis.

d) Not taking cognizance of the fact that same international transaction of Appellant has been accepted by Revenue/Appellate authorities to be at arm’s length in earlier years.

e) Ld. TPO/DRP have erred in not allowing a set off of surplus revenue/profit exceeding the arm’s length price (ALP) earned from the other projects done with AEs while computing the ALP under a transaction-by-transactions analysis approach.

3. Erred in proposing to initiate penalty proceedings under section 271(1)(c) of the Act against the appellant.”

2. The facts in brief are that the return of income was filed on 28.11.2012 declaring total income of Rs.22,70,51,890/-. The case was selected for scrutiny and the assessment u/s 143(3) of the Income Tax Act, 1961(hereinafter called as ‘the Act’) was completed vide order dated 31.3.2015 and income was assessed at Rs.30,73,99,730/-. Subsequently, this assessment was revised by the Ld. PCIT Bhopal vide his order dated 29.12.2015, thereby the Ld. PCIT referred matter relating to the transfer pricing to the Transfer Pricing Officer (TPO). Thereafter, the A.O. passed a draft order on the basis of the recommendation of the TPO for transfer pricing adjustments. The A.O. on the basis of the recommendation of the TPO made adjustments in respect of transactions related to receipt of contract revenue from projects and adjustment of difference on account of arm’s length price for transactions related to payment of technical services to
the Associated Enterprises (AEs). Total adjustment was made of Rs.44,48,880/-. Against this draft assessment, the assessee preferred objections before the Ld. DRP. Ld. DRP partly allowed the objections of the assessee, thereby the adjustments made on account of transactions related to payment of technical services amounting to Rs.34,12,846/- allowed the objection of the assessee. However, the adjustment made in respect of difference on account of arm’s length price for transactions related to receipt of contract revenue from projects of Rs.10,36,034/- was sustained. Against this finding, assessee is in appeal. The revenue has not filed any appeal against the finding of the Ld. DRP.

3. Ground Nos.1 & 2 are related to confirming the adjustment in respect of transactions related to contract revenue from projects. Ld. Counsel for the assessee reiterated the submissions as made in the written synopsis. For the sake of clarity, written synopsis filed are reproduced as under:

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