9911796707
TMI Blog2015 (6) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... unsel ORDER Per N.K. Saini, A.M. This is an appeal by the assessee against the order dated 31.12.2012, New Delhi. 2. Following grounds have been raised in this appeal: 1. The Hon ble Dispute Resolution Panel ( Hon bel DRP ) and the Learned Deputy Commissioner of Income-tax ( Ld. AO ) (following the directions of the Hon ble DRP), erred on facts and in law by holding that the international transaction of provision of sourcing support services to associated enterprises ( AEs ) undertaken by the Appellate does not satisfy the arm s length principle envisaged under the Income-tax Act 1961 ( the Act ). In doing so, the Hon be DRP and consequently the Ld. AO (following the directions of the Hon ble DRP) have grossly erred in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ections of the Hon ble DRP), erred on facts and in law in upholding the Ld. TPO s approach of including the value of the goods sourced directly by the AEs of the Appellant form third party vendors in the cost base of the Appellant, for the purpose of computing the arm s length profit margin of the Appellant on the alleged ground that it created supply chain and human asset intangibles in India and generated location savings in India which have not been factored in its prevailing/current remuneration model. 4. The Hon ble DRP and consequently the Ld. AO (following the directions of the Hon ble DRP), erred on facts and in law in disregarding the detailed submissions and extensive analysis to demonstrate that Appellant is operating on a gua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ither before or at the time of hearing of the appeal. 3. Facts of the case in brief are that the assessee is engaged in the business of transportation of time sensitive packages, documents and cargo to domestic and international destinations. The assessee filed its return of income on 29.09.2009 declaring an income of ₹ 8,24,64,443/-. Later on, the case was selected for scrutiny. The assessee operates as a procurement support services company for its foreign associated enterprises (AE) i.e. GAP US, under a model of reimbursement of the operating cost plus a markup of 15%. The TPO challenged the cost plus model adopted by the assessee in the earlier years and made the TP adjustments. In the year under consideration also, the AO had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Hon ble Delhi High Court vide order dated 16.12.2013, a reference was made to page no. 139 to 179 of the assessee s paper book which is the copy of the said order. It was further stated that the Hon ble High Court had approved the remuneration model of markup of 5% and the operation cost of Li Fung India, without considering the value of goods procured by the foreign AE of Li Fung India, directly from third party vendors in India. It was also stated that as opposed to a markup of 5% of operational costs, as blessed by Hon ble Delhi High Court in the case of Li Fung India (supra), the assessee operates on a markup of 15% of operational costs, which is anyway more conservative. It was contended that the markup of 32% as adopted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee can in no case exceed 12% and since the assessee was already earning a markup of 15%, there existed no case for adjustment. 6. In his rival submissions the ld. DR although supported the order of the AO but could not controvert the aforesaid contention of the ld. Counsel for the assessee. 7. We have considered the submissions of both the parties and carefully gone through the material available on the record. It was noticed that on a similar issue the Hon ble Jurisdictional High Court in the case of Li Fung India Pvt. Ltd. Vs CIT in ITA 306/2012 vide order dated 16.12.2013 observed as under: 49. This court summarizes its conclusions as follows: (a) The board basing of the profit determining denominator as the entir ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
