Munjal Showa Ltd, Gurugram V. JCIT, Special Range-6, New Delhi

ITA 8227/DEL/2018

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 9663 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 1 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-01-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I1
• Assessment Year: 2014-2015
• Appeal Filed On: 25-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SURENDER PAL
• Assessee Lawyers: SWETA GUPTA
• Keywords: Business income
• Section: 143(3); 144C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI ‘I-1’ BENCH, NEW DELHI (THROUGH VIDEO CONFERENCING] BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER, AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ITA No. 8227/DEL/2018 [A.Y 2014-15] M/s Munjal Showa Ltd Vs. The J.C.I.T 9-11, Maruti Industrial Area Special Range -6 Sector 18, Gurgaon New Delhi PAN: AAAMC 0070 D (Applicant) (Respondent) Assessee By : Ms. Sweta Gupta, CA Department By : Shri Surender Pal, CIT-DR Date of Hearing : 27.01.2022 Date of Pronouncement : 27.01.2022 ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER:- This appeal by the assessee is preferred against the order dated 16.10.2018 framed under section 143(3) r.w.s 144C the Income-tax Act, 1961 [hereinafter referred to as 'The Act'] for Assessment Year 2014-15. 2 2. Though the assessee has raised as many as six grounds of appeal, but the only ground argued before us is as under: “In law and on facts and circumstances of the case, the Assessing Officer/DRP erred in rejecting the export turnover filter of rejecting companies having export turnover of more than 10% of the total sales applied by the appellant and instead applying filter of rejecting companies having export sales of more than 15% of the total sales.” 3. Briefly stated, the facts of the case are that the appellant operates as an ancillary and manufactures shock absorbers and struts for leading two wheelers and four wheelers primary products being front, forks, shock absorbers, struts, gas springs and window balancers for sale in domestic market. The appellant has three manufacturing locations, two in Haryana and one in Uttarakhand. 4. The following international transactions/specified domestic transactions have been entered into by the assessee during the year under consideration: 3 4 5. One of the filters adopted by the assessee in his TP approach in respect of comparables was export sales less than/equal to 10% of sales. This filter was rejected by the TPO who was of the opinion that it is an inappropriate filter as no justification has been given by the assessee for applying this filter. 6. We find that the details of the export sales of total sales in the case of the assessee furnished before the TPO is as under: Export at FOB Value [A] Rs. 68,42,794/- Gross Sales [B] Rs. 17,34,66,50,876/- % of earning in foreign exchange on gross sales [A & B] 0.04% 7. It can be seen from the above that out of total sales made by the assessee, 99.96% of the total sales were made to the OEMs in India. In our considered opinion, in order to find comparables commensurate with geographical locations in which the assessee is functioning, application of 5 filter of 10% applied by the assessee is most reasonable. We further find that in the preceding Assessment Year i.e 2013-14, the DRP itself had accepted the filter of export sales less than /equal to 10% of export sales as an appropriate factor for comparability analysis. 8. Considering the past history of the assessee, we direct the TPO to exclude the comparable companies where export sales are more than 10% of the total sales and decide the issue afresh. With these directions, the appeal is allowed. 9. In the result, appeal of the assessee in ITA No. 8227/DEL/2018 is allowed. The order is pronounced in the open court on 27.01.2022 in the presence of both the representatives. Sd/- Sd/- [SAKTIJIT DEY] [N.K. BILLAIYA] JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 27 th January 2022. 6 VL/ Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi Date of dictation Date on which the typed draft is placed before the dictating Member Date on which the typed draft is placed before the Other Member Date on which the approved draft comes to the Sr.PS/PS Date on which the fair order is placed before the Dictating Member for pronouncement Date on which the fair order comes back to the Sr.PS/PS Date on which the final order is uploaded on the website of ITAT 28.1.2022 Date on which the file goes to the Bench Clerk Date on which the file goes to the Head Clerk The date on which the file goes to the Assistant Registrar for signature on the order Date of dispatch of the Order