Inteva Products India Automotive Private Limited Vs DCIT (ITAT Bangalore)
The appeal arose from the final assessment order passed under Sections 143(3) read with 144C(13) for Assessment Year 2013-14 involving transfer pricing adjustments in the manufacturing segment. During the hearing, the assessee did not press several grounds, leaving for adjudication issues relating to working capital adjustment, inclusion of a comparable, restriction of transfer pricing adjustment to international transactions, and the benefit under the proviso to Section 92C(2).
On the issue of working capital adjustment, the assessee contended that although the Transfer Pricing Officer (TPO) had accepted the principle of granting such adjustment, no adjustment had actually been allowed while determining the Arm’s Length Price (ALP). Relying on the Tribunal’s decision in the assessee’s own case for Assessment Year 2010-11, the Tribunal observed that the earlier directions requiring computation of working capital adjustment had not been properly implemented. Accordingly, it remitted the matter to the Assessing Officer/TPO to determine the appropriate working capital adjustment after examining the relevant records.
Regarding comparables, the assessee ultimately pressed only the inclusion of Mubea Suspension (India) Ltd. The company had been excluded by the TPO on the ground that it incurred losses in two out of three years. Referring to the decision in KBACE Technologies Pvt. Ltd., the Tribunal held that the persistent loss filter would not apply where the company had earned profit in one of the three consecutive financial years. It therefore restored the issue to the Assessing Officer/TPO for verification and reconsideration of the company’s inclusion in accordance with law.
