The case ITA 584/DEL/2021 involves an appeal by FMI Automotive Components Pvt. Ltd., Gurgaon, against the final assessment order passed by the Deputy Commissioner of Income Tax (DCIT), Circle-7(1), New Delhi, for the assessment year 2016-17. The appeal addresses various issues, including transfer pricing adjustments, disallowances, and excise duty liabilities.
The details of the case are as follows:
The case was heard on 06.09.2021 before the Delhi Bench ‘I-1’ of the Income Tax Appellate Tribunal (ITAT) through video conferencing, comprising Judicial Member Shri Amit Shukla and Accountant Member Shri O.P. Kant. The appellant was represented by Sh. Himanshu S. Sinha and Sh. Bhuwan Dhoopar, while the respondent was represented by Sh. Surender Pal, CIT(DR).
The grounds of appeal raised by the appellant were as follows:
The TPO made a transfer pricing adjustment of INR 56,50,353, rejecting the appellant’s benchmarking analysis and adding 10 new comparables to the list, making a total of 13 comparables. The TPO calculated the working capital adjusted mean margin of these comparables at 4.81% and adjusted the operating profit margin of the appellant to 0.92%. The appellant contested this adjustment, arguing that the TPO failed to appreciate the correct FAR analysis and selected inappropriate comparables.
The Assessing Officer disallowed INR 11,03,93,150 based on a fall in the net profit ratio by 2.18% compared to the preceding year. The appellant argued that this fall was due to increased costs and submitted a reconciliation chart of expenses. However, the Assessing Officer did not find the evidence credible and upheld the disallowance. The Tribunal restored the issue to the file of the Assessing Officer for further examination and verification of the appellant’s claims.
The Assessing Officer disallowed INR 33,92,861 on account of non-payment of excise duty liability, based on the tax audit report that did not specify the payment date. The appellant contended that the excise duty was paid through CENVAT credit before the due date of filing the return. The Tribunal restored the issue to the file of the Assessing Officer for verification of the reconciliation chart of CENVAT credit taken and utilized by the appellant.
The Tribunal allowed the appeal for statistical purposes, directing the Assessing Officer to re-examine and verify the appellant’s claims regarding transfer pricing adjustments, disallowances on account of expenses, and non-payment of excise duty liability. The decision emphasizes the importance of thorough examination and verification of evidence in tax assessments.
Order pronounced in the open court on 24th September, 2021.
AMIT SHUKLA
JUDICIAL MEMBER
O.P. KANT
ACCOUNTANT MEMBER
Dated: 24th September, 2021
RK/- (DTDC)
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR
Asst. Registrar, ITAT, New Delhi
ITA 584/DEL/2021: FMI Automotive Components Pvt. Ltd., Gurgaon vs. DCIT, Circle-7(1), New Delhi
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