Young Buhmwoo India Company Pvt. Ltd., Kancheepuram V. AIT, CHENNAI

ITA 3181/CHNY/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4855 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-04-2017
• Appeal Filed By: Assessee
• Bench Allotted: D
• Next Hearing Date: 22-02-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 18-11-2016
• Court: TRIBUNAL
• Department Lawyers: PATHLAVATH PEERYA
• Keywords: Depreciation; Transfer pricing; International transaction; Assessment record
• Section: 234B; 10B

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH: CHENNAI . . . , '.. $ , ) BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI D.S.SUNDER SINGH, ACCOUNTANT MEMBER ./ ITA NO.3181/MDS/2016 * * /ASSESSMENT YEAR: 2012-13 M/S.YOUNG BUHMWOO INDIA CO. PVT. LTD., K5 PHASE II, SIPCOT INDUSTRIAL PARK, MAMBAKKAM VILLAGE, SRIPERUMBUDUR, KANCHEEPURAM DIST.-631 560, TAMIL NADU. VS. THE ASST. COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 3(2), ROOM NO.414, 4 TH FLOOR, WANAPARTHY BLOCK, AAYAKAR BHAVAN, NO.121, M.G.ROAD, NUNGAMBAKKAM, CHENNAI-600 034. [PAN: AAACY 2562 N ] ( - /APPELLANT ) ( ./- /RESPONDENT) - 0 / APPELLANT BY : MR.RAGHUNATHAN SAMPATH, ADV. ./- 0 /RESPONDENT BY : MR.PATHLAVATH PEERYA, CIT 0 /DATE OF HEARING : 22.02.2017 0 /DATE OF PRONOUNCEMENT : 19.04.2017 / O R D E R PER D.S.SUNDER SINGH , ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER DATED 03.08.2016 OF DISPUTE RESOLUTION PANEL-2, BANGALORE , IN DRP FILE NO.524/DRP-2-BNG/2015-16 FOR THE AY 2012-13 AND RAI SED THE FOLLOWING GROUNDS: ITA NO.3181/MDS/2016 :- 2 -: GROUNDS OF APPEAL: 1. ASSESSMENT AND REFERENCE TO TRANSFER PRICING OFFICER ARE BAD IN JAW- 1.1 THE FINAL ORDER PASSED BY ASSISTANT COMMISSIONER OF INCOME TAX IS BAD IN LAW AND LIABLE TO BE QUASHED. 1.2 THE DRPS ORDER HAS ALSO VIOLATED PRINCIPLE OF NATU RAL JUSTICE AND HENCE THE DRP ORDER IS ALSO LIABLE TO BE QUASHED. 1.3 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LEARNED TPO ERRED IN NOT DEMONSTRATING THAT THE MOTIVE OF THE ASSESSEE W AS TO SHIFT PROFITS OUTSIDE OF INDIA BY MANIPULATING THE PRICES CHARGED IN ITS INTERNATI ONAL TRANSACTIONS, WHICH IS A PREREQUISITE CONDITION TO MAKE ANY ADJUSTMENT UNDER THE PROVISION OF CHAPTER-X OF THE ACT. 1.4 THE DISPUTE RESOLUTION PANEL (DRP) OMITTED TO ADDRES S CERTAIN KEY SUBMISSIONS MADE WITH RESPECT TO DRAFT ORDER ISSUED BY AO IS BAD IN L AW. 2. TPO ERRED IN NOT ADDING DEPRECIATION FOR DETERMINA TION OF ARMS LENGTH PRICE. 2.1 THE TPO ALSO ERRED ON FACTS AND IN LAW IN NOT ADDING BACK DEPRECIATION OF TESTED PARTY AS WELL AS COMPARABLE COMPANIES, TO ELIMINATE THE D IFFERENCE IN METHODS FOLLOWED. 3. ERRED IN NOT CONSIDERING THE POWER RELATED ADJUSTM ENT FOR DETERMINATION OF ARMS LENGTH PRICE BY THE TPO 3.1 THE TPO ALSO ERRED ON FACTS AND LAW IN NOT CONSIDERI NG POWER RELATED ADJUSTMENT AS THE COMPANY MAINLY CATERS TO SINGLE OEM AND LOCATED IN P OWER-STARVED AREA IN SRIPERUMBUDUR, TAMIL NADU. 4. TPO ERRED IN NOT CONSIDERING THE LONGER CREDIT PERI OD ADJUSTMENT FOR DETERMINATION OF ARMS LENGTH PRICE. 5. TPO/DRP ERRED IN NOT ALLOWING THE RISK ADJUSTMENT IN CASE OF COMPARABLE COMPANIES. 5.1 THE TPO ERRED IN LAW AND ON FACTS IN NOT ALLOWING AP PROPRIATE ADJUSTMENTS UNDER RULE 10B TO ACCOUNT FOR, INTER ALIA, DIFFERENCES IN RISK PROFILE BETWEEN THE ASSESSE AND THE COMPARABLE COMPANIES. 6. WITHOUT PREJUDICE TO OUR OTHER SUBMISSIONS, TPO/DRP ERRED IN COMPUTING THE DOWNWARD ADJUSTMENT. 7. THE TPO/DRP ERRED IN NOT CONSIDERING THE BENEFIT OF +/ (-) 5% ADJUSTMENT. 8. THE AO OMITTED TO CONSIDER THE SET-OFF OF EARLIER YE AR CARRIED FORWARD LOSSES. 9. THE AO OMITTED TO CONSIDER MAT CREDIT UNDER SECTION 115JAA OF THE ACT. 10. THE APPELLANT PRAYS CONSEQUENTIAL RELIEF OF INTERES T UNDER SECTION 234B UNDER THE ACT. 11. DIRECTIONS ISSUED BY THE HONORABLE DISPUTE RESOLUTI ON PANEL. 11.1 THE HONORABLE DRP HAS ERRED IN LAW AND ON FACTS IN NOT TAKING COGNIZANCE OF THE OBJECTIONS FILED BY THE APPELLANT MENTIONED ABOVE I N RELATION TO THE DRAFT ASSESSMENT ORDER/TP ORDER ISSUED BY THE AO/ TPO IN THE PROCEEDINGS BEFORE THEM. 12. THE APPELLANT CRAVES LEAVE TO ADD OR ALTER, BY DELE TION, SUBSTITUTION, MODIFICATION OR OTHERWISE, THE ABOVE GROUNDS OF APPEAL, EITHER BEFO RE OR DURING THE HEARING OF THE APPEAL. THE APPELLANT SUBMITS THAT THE ABOVE GROUNDS ARE IN DEPENDENT AND WITHOUT PREJUDICE TO ONE ANOTHER. ITA NO.3181/MDS/2016 :- 3 -: 2.0 BACKGROUND OF THE COMPANY: M/S.YOUNG BUHMWOO INDIA COMPANY PVT LTD IS A SUBSI DIARY OF BUHMWOO CO LTD, SOUTH KOREA WHICH HOLDS 60.43% OF T HE SHARES, WITH BUHMWOO CHEMICALS CO LTD, SOUTH KOREA HOLDING 23.74 %. THE BALANCE 15.83% OF THE SHARES ARE HELD BY YUSHIRO CHEMICALS CO LTD, JAPAN. THE ASSESSEE WAS INCORPORATED AS PRIVATE LIMITED COMPAN Y UNDER THE COMPANIES ACT 1956, DURING NOVEMBER 2005. THE COMPA NY IS HAVING ITS MANUFACTURING FACILITY IN SRIPERUMBUDUR, KANCHEPURA M DISTRICT, TAMIL NADU. THE COMPANY IS ENGAGED IN LUBRICANT SECTOR, M ANUFACTURING CAVITY WAX, UNDER BODY WAX, HYDRAULIC OIL, WAY LUBE OIL, G EAR OIL, SPINDLE OIL, VACUUM OIL, COMPRESSOR OIL, CUTTING OIL, PRESS OIL, CLEANING OIL, ANTI RUSTING OIL & DISCHARGING OIL. OTHER THAN THESE MAIN PRODUC TS, THE COMPANY ALSO MANUFACTURE SPECIALTY PRODUCTS LIKE ORCHARD SPRAY O IL & KNITTING OIL. APART FROM THE ABOVE MENTIONED OIL, THE COMPANY IS IMPORT ING HEAT TREATMENT OIL, ROLLING OIL, AUTOMOTIVE RUST PREVENTIVES & GRE ASE DIRECTLY FROM ITS PARENT COMPANY AND DELIVERING TO CUSTOMERS AS PER T HEIR NEED AND REQUIREMENTS & PROVIDES TECHNICAL SUPPORT TO ALL TH EIR CUSTOMERS. THE COMPANY BASICALLY CATERS TO AUTOMOTIVE INDUSTRY ORI GINAL EQUIPMENT MANUFACTURERS (OEM5) S LIKE HYUNDA MOTORS AND RES T TO ENGINEERING INDUSTRIES. ITA NO.3181/MDS/2016 :- 4 -: 3.0 ASSETS EMPLOYED AND RISKS CARRIED: LAND & BUILDING AND OTHER INFRASTRUCTURE, HUMAN RES OURCES AND INTANGIBLES ARE USED IN MANUFACTURING AND TRADING F UNCTIONS OF THE ASSESSEE COMPANY. PRODUCT QUALITY RISK, INVENTORY R ISK, COLLECTION RISK, FOREIGN EXCHANGE RISK AND MAN POWER RISK ARE CARRIE D BY THE ASSESSEE COMPANY. TECHNOLOGY UPGRADATION RISK IS CARRIED BY THE ASSOCIATED ENTERPRISE. (AE) OF THE ASSESSEE COMPANY. 4.0 THE ASSESSEE HAS ENTERED INTO AN INTERNATIONAL TRA NSACTION FOR IMPORT OF RAW MATERIAL AND SEMI FINISHED PRODUCTS F OR AN AMOUNT OF RS.18,22,07,656/-. THE ASSESSING OFFICER (IN SHORT AO) REFERRED THE INTERNATIONAL TRANSACTION TO THE TPO FOR DETERMININ G THE ARMS LENGTH PRICE (IN SHORT ALP). AS PER THE TP DOCUMENT, THE COMP ARABLES PROVIDED BY THE ASSESSEE WERE M/S.CONTINENTAL PETROLEUM LTD., A ND NANDAN PETROCHEM LTD. THE ASSESSEE HAS ADOPTED THE TNMM AS MOST APP ROPRIATE METHOD FOR COMPUTING THE ALP. THE ASSESSEE COMPUTED THE AVERA GE MARGINS OF THE ABOVE COMPANIES AT 6.71% BEFORE RISK ADJUSTMENT @5 % AND AFTER RISK ADJUSTMENT THE MEAN MARGIN WAS 1.71%. NOT BEING IMP RESSED WITH THE COMPUTATION OF THE MEAN MARGIN ARRIVED BY THE ASSES SEE COMPANY, THE TPO HAS ISSUED SHOW CAUSE NOTICE AND CONDUCTED IND EPENDENT SEARCH PROCESS AND SELECTED THE SAME SET OF COMPARABLES SE LECTED BY THE ASSESSEE. THE OPERATING MARGIN COMPUTED BY THE ASS ESSEE IS AS UNDER: ITA NO.3181/MDS/2016 :- 5 -: DEPRECIATION AMOUNT IN INR SALES 330,559,064 SERVICE INCOME 29,429,011 OPERATING SALES (A) 359,988,075 RAW MATERIAL COST 270,986,418 INCREASE /DECREASE IN STOCK (26,657,466) PAYMENT & BENEFITS FOR EMPLOYEES 51,427,878 MANUFACTURING EXPENSES 5,463,239 ADMINISTRATIVE EXPENSES 21,659,037 EXCISE DUTY 36,609,956 DEPRECIATION 11,467,435 FINANCE CHARGES 74,227 OPERATING COST (B) 368,030,724 PROFIT BEFORE TAX(PBT) C=(A-B) - 8,042,649 ADD: FINANCE CHARGES (D) 74,227 PROFIT BEFORE INTEREST AND TAX (PBIT) E=(C+D) -7,968, 422 ADD: DEPRECIATION (F) 11,467,435 PROFIT BEFORE INTEREST, TAX. DEPRECIATION AND AMOR TIZATION (EBITDA) (G)=(E)+(F) 3,499,013 ADD: POWER RELATED ADJUSTMENT AS MENTIONED IN PARA 6.10(H) 4,04,904 ADJUSTED OPERATING PROFIT I= (G+H) 3,914,924 PROFIT ON SALES % J = (I/A*100) 1.09% ADD: LONGER CREDIT PERIOD ADJUSTMENT AS PER ANNEXUR E 1A (K) 2.05% ADJUSTED OPERATING PROFIT (L) = (J) + (K) 3.14% 5.0 THE ASSESSEE HAS MADE THE ADJUSTMENTS IN COMPUTING THE OPERATING MARGIN WITH REGARD TO THE EXCISE DUTY, POWER RELATE D ADJUSTMENT, LONG PERIOD CREDIT, ADJUSTMENT FOR DEPRECIATION AND FORE X LOSS AS NON-OPERATING COST. THE TPO HAS REJECTED THE ADJUSTMENTS SOUGHT BY THE ASSESSEE AND RE-WORKED THE PLI OF THE ASSESSEE AT (-)14.20% AS U NDER: SALES 33,05,59,064 LESS: EXCISE DUTY 3,32,73,825 OPERATING SALES 29,72,85,239 OPERATING COST 33,99,33,977 PBIT (4,26,48,738) ADD: FOREX LOSS 4,12,270 ADJUSTED OPERATING PROFIT (4,22,36,468) PROFIT ON SALES -14.20% 6.0 AGAINST THE PLI OF (-) 14.20% OF THE ASSESSEE THE TPO DETERMINED AVERAGE MEAN OF 6.16% OF COMPARABLES M/S.CONTINENT AL PETROLEUM LTD., AND NANDAN PETROCHEM LTD. AS UNDER: ITA NO.3181/MDS/2016 :- 6 -: NAME OF COMPANY / EXPRESSION CONTINENTAL PETROLEUM LTD NANDAN PETROCHEM LTD OPERATING INCOME 19.22 140.78 OPERATING EXP 18.02 132.23 OPERATING PROFIT 1.20 8.55 OP/OL 6. 24% 6.07% MEAN 6.16% - 7.0 WITH THE AVERAGE MARGIN OF 6.16% THE TPO DETERMINE D THE ALP AS UNDER: DESCRIPTION ASSESSEES MARGIN(A) - 14.20% COMPARABLE MARGIN(B) 6.16% DIFFERENCE IN MARGIN(C) = (A) +(B) 20.36% TOTAL REVENUE FOR THE YEAR (D) RS.33,05,59,064 ARMS LENGTH COST (E) = 79.64% OF (D) RS.26,32,57,23 9 ACTUAL COST AS PER BOOKS (F) RS.33,99,33,977 AE COST (G) RS.18,22,07,656 PROPORTION OF AE COST TO TOTAL COST (H) = (F)/(G) * 1 00 53.60% PROPORTIONATE ARMS LENGTH COST (I)=(E) * (H) RS. 14 , 11,05,880 DOWNWARD ADJUSTMENT TO COST (J)=(G)-(I) RS.4,11,01,776 8.0 THE TPO DETERMINED THE ALP AT RS.14,11,05,880/- AG AINST THE ACTUAL COST OF GOODS AS PER BOOKS AT RS.18,22,07,656/- AND SUGGESTED FOR DOWNWARD ADJUSTMENT OF RS.4,11,01,776/-. THE AO IS SUED DRAFT SHOW CAUSE NOTICE ON RECEIPT OF ORDER FROM THE TPO AND T HE ASSESSEE FILED OBJECTIONS BEFORE THE DISPUTE RESOLUTION PANEL (IN SHORT DRP) BY RAISING VARIOUS GROUNDS. THE DRP HAS ISSUED DIRECTIONS TO THE AO TO WORK OUT THE ALP COST FOR TOTAL COST BASE OF THE ASSESSEE INSTEA D OF RESTRICTING IT TO PROPORTIONATE AE COST AND THE AO/TPO REWORKED THE A LP AS PER THE DIRECTION OF DRP WHICH WORKED OUT RS.2,47,40,797/- AS AGAINST ORIGINAL ADJUSTMENT OF RS. 4,11,01,776/ AND CONCLUDED THE AS SESSMENT, ON TOTAL INCOME OF RS.1,58,28,140/- AGAINST THE RETURNED LOS S OF RS.93,24,923/-. ITA NO.3181/MDS/2016 :- 7 -: AGAINST THE ORDER OF THE AO PASSED U/S.143(3) R.W.S .144C THE ASSESSEE HAS FILED THE APPEAL BEFORE THIS TRIBUNAL. 9.0 APPEARING FOR THE ASSESSEE, THE LD.AR INVITED OUR ATTENTION TO PARA NO.5.7 AND 6.0 OF THE DRP ORDER WHEREIN THE DRP HA S DIRECTED THE AO/TPO TO WORK OUT THE ALP OF THE COST WHICH IS EXT RACTED AS UNDER: 5.7 THUS ADJUSTMENT U/S.92CA IN ABOVE EXAMPLE WORKS OUT TO RS.10/-, WHICH IS THE SAME AS PRESUMED ABOVE IN THE EXAMPLE. NOW IF THE ARGUME NT OF THE ASSESSEE IS ACCEPTED THEN ADJUSTMENT OF ONLY 37.50% OF RS.10 I.E. RS.3.75/- C AN BE MADE WHICH IS EVIDENTLY NOT CORRECT. SO THIS ARGUMENT OF THE ASSESSEE IS DEVOID OF ANY MERIT AND THUS CANNOT BE ACCEPTED. ANY IMPACT ON THE BASIS OF CALCULATION OF ALP BY MAM (HERE TNMM) HAS TO BE CONSIDERED AS ADJUSTMENT U/S.92CA AND THE SAME CANNO T BE PROPORTIONATELY REDUCED BY CONSIDERING THAT A PART OF THE PURCHASES WAS FROM N ON AE ALSO. WHATEVER IS THE REDUCTION IN THE MARGIN OF THE ASSESSEE VIS-A-VIS COMPARABLES IS ON ACCOUNT OF INFLATED PURCHASES FROM AE AND THE SAME GETS CONSIDERED WHEN ALP IS CALCULA TED BY APPLYING TNMM. THE AO/TPO IS DIRECTED TO WORK OUT THE ALP COST FOR THE TOTAL COST BASE OF ASSESSEE AND EFFECT FULL DOWNWARD ADJUSTMENT RATHER THAN RESTRICTING TH E SAME PROPORTIONATELY TO AE COST ONLY. 6.0 AS REGARDS OBJECTION IN GROUND 10, IT IS SEEN THAT AO FOUND THAT AN AMOUNT OF RS.3,09,19,951/- HAS BEEN REFLECTED AS SERVICE INCO ME RECEIVED BY THE ASSESSEE IN FORM 26AS. THIS INCOME IS SHOWN TO BE RECEIVED FROM M/S. HYUNDAI MOTORS INDIA LTD., AND M/S.KUKDON COOLAND INDIA PVT. LTD. AND TDS TO THE TU NE OF RS.6,18,435/- HAS BEEN MADE. HOWEVER, THE ASSESSE HAS SHOWN AN AMOUNT OF RS.2,74 ,57,882/- ONLY IN ITS P&L A/C AS SERVICE INCOME RECEIVED. HENCE, THE DIFFERENCE OF RS.34,62,069/- (3,09,19,951- 2,74,57,882) SHOWN LESS AS SERVICE INCOME WAS ADDED BY THE AO. THE ACTION OF THE AO IS FULLY JUSTIFIED. HOWEVER, IN VIEW OF CLAIM BY THE ASSESSE BEFORE THI S PANEL THAT THE DIFFERENCE IS ON ACCOUNT OF SERVICE TAX AND TDS PER TAINING TO THE INCOME FOR FY 2010-11, THE AO IS DIRECTED TO PROVIDE AN OPPORTUNI TY TO THE ASSESSE TO PRODUCE DETAILS AND EVIDENCE BEFORE HIM AND THE AO WILL CON SIDER THE SAME AND DECIDE THE MATTER AS PER LAW. THE LD.AR ARGUED THAT AS PER THE DIRECTION OF DRP, IT HAS SET-ASIDE THE MATTER TO THE FILE OF THE AO/TPO TO WORK OUT TH E ALP COST FOR THE TOTAL COST BASE AND EFFECT FULL DOWNWARD ADJUSTMENT RATHE R THAN RESTRICTING THE SAME PROPORTIONATELY. IN THIS CONNECTION, THE LD.AR INVITED OUR ATTENTIO N TO SEC.144C OF INCOME TAX ACT (IN SHORT THE ACT) AND ARGUED THAT THE DRP HAS NO POWER TO REMIT THE MATTER BACK TO THE FILE OF THE AO. TH E DRP HAS ONLY POWER TO ITA NO.3181/MDS/2016 :- 8 -: CALL FOR ENQUIRIES, DETERMINE THE ALP AND ISSUE DIR ECTIONS. THEREFORE, THE LD.AR ARGUED THAT THE ENTIRE CASE SHOULD BE REMITTE D BACK TO THE FILE OF THE DRP ON TRANSFER PRICING ISSUE. ON THE OTHER HA ND, THE LD.DR HAS RELIED ON THE LOWER AUTHORITIES ORDERS. 10.0 WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MAT ERIAL PLACED ON RECORD. WE HAVE ALSO CAREFULLY GONE THROUGH SEC.144C OF IN COME TAX ACT AND THE RELEVANT PROVISIONS OF SUB.SEC.7 & 8 ARE EX TRACTED AS UNDER: [ REFERENCE TO DISPUTE RESOLUTION PANEL. 3 144C. (1) THE ASSESSING OFFICER SHALL, NOTWITHSTANDING ANY THING TO THE CONTRARY CONTAINED IN THIS ACT, IN THE FIRST INSTANCE, FORWA RD 3A A DRAFT OF THE PROPOSED ORDER OF ASSESSMENT (HEREAFTER IN THIS SECTION REFERRED TO A S THE DRAFT ORDER) TO THE ELIGIBLE ASSESSEE IF HE PROPOSES TO MAKE, ON OR AFTER THE 1ST DAY OF OCTOBER, 2009, ANY VARIATION IN THE INCOME OR LOSS RETURNED WHICH IS PREJUDICIAL TO THE INTEREST OF SUCH ASSESSEE. (2) ON RECEIPT OF THE DRAFT ORDER, THE ELIGIBLE ASSES SEE SHALL, WITHIN THIRTY DAYS OF THE RECEIPT BY HIM OF THE DRAFT ORDER (A).. (7) THE DISPUTE RESOLUTION PANEL MAY, BEFORE ISSUING ANY DIRECTIONS REFERRED TO IN SUB- SECTION (5), (A) MAKE SUCH FURTHER ENQUIRY, AS IT THINKS FIT; OR (B) CAUSE ANY FURTHER ENQUIRY TO BE MADE BY ANY INCOME- TAX AUTHORITY AND REPORT THE RESULT OF THE SAME TO IT. (8) THE DISPUTE RESOLUTION PANEL MAY CONFIRM, REDUCE OR ENHANCE THE VARIATIONS PROPOSED IN THE DRAFT ORDER SO, HOWEVER, THAT IT SHALL NOT S ET ASIDE ANY PROPOSED VARIATION OR ISSUE ANY DIRECTION UNDER SUB-SECTION (5) FOR FURTHER ENQU IRY AND PASSING OF THE ASSESSMENT ORDER. 11.0 FROM SUB.SEC.8 OF SECTION 144C OF THE ACT, THE DR P IS EMPOWERED TO CONFIRM OR REDUCE OR ENHANCE THE VARIATIONS PROP OSED IN THE DRAFT ORDER. BUT THERE IS NO POWER VESTED WITH THE DRP T O SET-ASIDE OR ISSUE DIRECTION UNDER SUB-SEC.5 FOR FURTHER ENQUIRY. IN T HE INSTANT CASE, AS EVIDENT FROM PARA NO.5.7 AND PARA 6.0 THE DRP HAS REMITTED THE MATTER BACK TO THE FILE OF THE AO/TPO FOR RE-WORKING THE A LP. THEREFORE, WE ARE ITA NO.3181/MDS/2016 :- 9 -: OF THE CONSIDERED OPINION THAT THE ISSUE SHOULD GO BACK TO THE FILE OF DRP FOR CONDUCTING THE ENQUIRIES ON ITS OWN AND DETERMI NE THE AMOUNT OF ALP AND ISSUE NECESSARY THE DIRECTIONS TO THE AO/TPO TO MAKE THE ADJUSTMENTS. ACCORDINGLY, ALL THE TRANSFER PRICING ISSUES ARE REMITTED BACK TO THE FILE OF THE DRP TO DECIDE THE OBJECTION OF T HE ASSESSE AND DECIDE AFRESH ON MERITS. THE APPEAL OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSES. 12.0 GROUND NOS.1.1 TO 7 & 11 STANDS REMITTED TO THE FI LE OF DRP AND ALLOWED FOR STATISTICAL PURPOSES. 13.0 GROUND NO.8 IS RELATED TO SET OFF OF EARLIER YEAR BROUGHT FORWARD LOSSES AND GROUND NO.9 IS RELATED TO THE MAT CREDIT U/S.115JAA OF THE ACT. THE ASSESSING OFFICER HAS NOT ALLOWED THE SET OFF OF EARLIER YEAR BROUGHT FORWARD LOSSES FROM THE ASSESSED INCOME AND NO REASONING IS GIVEN FOR NOT ALLOWING THE SETOFF. THE LD. A.R REQU ESTED FOR SET OFF OF EARLIER LOSSES AGAINST THE ASSESSED INCOME. NEITHER THE AR NOR THE LD.DR FURNISHED THE DETAILS OF EARLIER YEAR LOSSES WHICH WERE BROUGHT FORWARDED TO THE CURRENT YEAR. SIMILARLY THE DETAILS REGARDIN G THE FARES PAID UNDER MAT PROVISIONS IN THE EARLIER YEARS AND BALANCES TO BE ADJUSTED ARE REQUIRED FOR ADJUDICATING THE ISSUE. THE LD.AR AND THE LD.DR COULD NOT FURNISH THE DETAILS WITH RELEVANT EVIDENCES AND ORD ERS. BOTH THE ISSUES REQUIRE VERIFICATION FROM THE ASSESSMENT RECORDS AN D BOTH THE PARTIES HAVE AGREED TO REMIT THE MATTER BACK TO THE FILE OF THE AO TO VERIFY THE ITA NO.3181/MDS/2016 :- 10 -: ASSESSMENT RECORDS AND ALLOW THE CARRY FORWARD UNAB SORBED LOSSES OF EARLIER YEARS AND ALLOW MAT CREDIT. ACCORDINGLY, BO TH THE ISSUES ARE REMITTED TO THE FILE OF THE AO WITH A DIRECTION TO SET OFF EARLIER YEARS LOSSES AND TO ALLOW THE TAXES PAID UNDER MAT PROVIS IONS AFTER DUE VERIFICATION. GROUND NOS.8 & 9 ARE ALLOWED FOR STA TISTICAL PURPOSES. 14.0 GROUND NO.10 IS RELATED TO THE INTEREST U/S.234B O F THE ACT WHICH IS CONSEQUENTIAL AND MANDATORY IN NATURE. THE LD.AR H AS NOT MADE ANY ARGUMENT ON THIS ISSUE. THEREFORE, THIS GROUND IS DISMISSED. 15.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMI SSED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH APRIL, 2017, AT CHENNAI. SD/- SD/- ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER ( ' . . $ ) (D.S.SUNDER SINGH) /ACCOUNTANT MEMBER /CHENNAI, 5 /DATED: 19 TH APRIL, 2017. TLN 0 .$6 76 /COPY TO: 1. - /APPELLANT 4. 8 /CIT 2. ./- /RESPONDENT 5. 6 . /DR 3. 8 ( ) /CIT(A) 6. * /GF