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Judgment
PER MANISH AGARWAL, A.M.:
The present appeal is filed by Revenue against the order dated 17.02.2022 passed by Ld. Commissioner of Income Tax (A)-44, New Delhi [“Ld. CIT(A)”] in Appeal No. CIT(A), Delhi-8/10950/2019-20/CIT(A)-44 u/s 250 of the Income Tax Act, 1961 [“the Act”] arising out of assessment order dated 29.01.2020 passed u/s 143(3) r.w.s. 144C(3) of the Act pertaining to Assessment Year 2016-17.
Brief facts of the case are that the assessee company i.e. Samsung C&T Corporation India Private Limited (SCTCIPL), incorporated in India is a wholly owned subsidiary of Samsung C&T Corporation (SCTC), Seoul, Korea and mainly engaged in domestic trading and services, providing services of Trading of Industrial Material on commission basis and Export of business support services to its AE. The assessee company has filed return of income on
30.11.2016, declaring total loss of INR 1,31,21,992/-. The case was selected for scrutiny under CASS and as there were international transactions with its AEs, a reference was made to the TPO. The assessee has entered into following international transactions:-
The TPO has accepted all the transactions carried out by the assessee being at Arm’s Length Price (ALP) except the transactions related to trading of material on commission basis where the TPO has made the adjustment of INR 2,36,63,215/-. Thereafter, the draft assessment order was passed by making addition to the extent of adjustment made by the TPO however, the assessee has not filed any objections before ld. DRP therefore, the AO has passed the assessment order u/s 143(3) r.w.s. 144C of the Act wherein any addition to the adjustment made of INR 2,36,63,215/- made by the TPO on account of ALP adjustment of international transactions of trading of Industrial material on commission basis i.e. market support service. The AO further disallowed expenditure of membership/entry fee subscription of INR 16,09,907/- by treating the same as personal in nature. Accordingly, the total income of the assessee was assessee at INR 1,21,51,130/-.
Against the said order, the assessee preferred appeal before ld. CIT(A) who in terms of its order dated 17.02.2022, has allowed the appeal of the assessee by holding that the assessee is accepting the contention of the assessee.
Aggrieved by the order of ld. CIT(A), Revenue is in appeal before the Tribunal by taking following Grounds of appeal:-
1.“Whether the Ld. CIT(A) was justified in its decision of accepting assessee's approach to consider only benchmarking of 'Trading of Industrial material on Commission basis (International Division)' in the 'Trading & Commission on Trading Activities' Segment and non inclusion of the Domestic Sales in this segment when the assessee itself considers both the functions i.e. international and domestic in this segment in the TP study report and also audited financial of the assessee company reflects segmental accounting for the 'Trading and Commission on Trading Activities' and this segment does not segregate any international or domestic sale.
2.Whether the Ld. CIT(A) was justified in its decision of accepting assessee's approach to consider only benchmarking of 'Trading of Industrial material on Commission basis (International Division)' in the 'Trading & Commission on Trading Activities' Segment and non inclusion of the Domestic Sales of this segment on the ground that the assesse's such approach has been accepted by the department in preceding years when the principle of res judicata is not applicable in Transfer Pricing proceedings and the TPO has applied other view after the detailed FAR analysis of the assessee company.
3.Whether the Ld. CIT(A) was justified in its decision of treating 'Bad Debts Written Off' at par with writing back of provisions for bad and doubtful debts no longer required in terms of operating and non-operating in nature. Where as bad debts written back is a direct expense and its bearing on profit & loss accounts is clear as it is created on account of amount not receivable from the debtors and the debtors are mainly created from the credit sales/operating income of the business.
4.Whether the Ld. CIT(A) has not erred in considering the assessee company as engaged in marketing of products only thereby rejecting TPO's approach of selecting comparables engaged in providing Marketing Support Services whereas as per the agreement between the assessee and the AE Trading of Industrial Material on Commission basis is also covered under the marketing support service segment.”
The appeal filed by the Revenue is delayed by 64 days for which an application was filed, stating that due to the time barring matters, the appeal could not be filed on time. After considering the submissions, we hereby condoned the delay and admit the appeal of the assessee for adjudication.
All the Grounds of appeal are with respect to the ALP adjustment made by the AO/TPO with respect to international transactions of trading of natural material on commission basis. It is observed that ld. CIT(A) had considering submissions of the assessee and deleted the addition/adjustment made by making following observations:-
Before us, revenue has failed to controvert the findings given by ld. CIT(A). More particularly, when the transactions of identical nature were carried out in the preceding assessment years where the assessments were completed u/s 143(3) and the AO/TPO has accepted the ALP declared by the
assessee on the trading of natural material on commission basis. For this, a reference is also made to the chart given at page 2 of the written submissions which is reproduced as under:-
Considering the overall facts and circumstances of the case and following the judgement of Hon’ble Supreme Court in the case of Radhasoami Satsang v. CIT reported in (1992) 193 ITR 321 (SC), we are of the considered view that once the Revenue has accepted the margins declared by the assessee in preceding assessment years as well as succeeding assessment years and there is no change in the facts and circumstances, no adjustment is required to be made in the year under appeal on solitary basis. Accordingly, we find no error in the order of ld. CIT(A) in deleting the additions made which order is hereby, upheld. All the Grounds of appeal raised by the Revenue are dismissed.
In the result, appeal of the Revenue is dismissed.