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TMI Blog2016 (12) TMI 1135X X X X Extracts X X X X X X X X Extracts X X X X ..... esolution Panel and the Transfer Pricing Officer have not adopted any of the methods prescribed under Section 92C of the Act. As rightly contended by the Ld.counsel for the assessee, the DRP resorted to statistical method to benchmark the international transaction. This Tribunal is of the considered opinion that the DRP is expected to find out most appropriate method among the methods prescribed under Section 92C of the Act. The Dispute Resolution Panel is not expected to travel beyond the method prescribed under Section 92C of the Act. Cusstoms duty adjustment and working capital employed, the Dispute Resolution Panel has simply placed its reliance on its own order in the assessee's own case for assessment year 2009-10. This Tribunal ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of the Assessing Officer, consequent to the directions of Dispute Resolution Panel dated 10.12.2014 and pertains to assessment year 2010-11. 2. Sh. SP. Chidambaram, the Ld.counsel for the assessee, submitted that the assessee-company is a wholly owned subsidiary of Doowon Corporation Korea. According to the Ld. counsel, the assessee-company is engaged in the business of manufacturing automotive air conditioning systems and its parts. The manufacturing plant is situated near Chennai. According to the Ld. counsel, in the course of its manufacturing activity, the assessee has purchased raw material from its Associate Enterprise outside India. The assessee has also paid fee for technical services. The Ld.counsel further submitted that capi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of Customs duty has to be necessarily eliminated while making comparison by adopting Transaction Net Margin Method. However, the Dispute Resolution Panel, after considering its own directions in the assessee's own case for assessment year 2009-10, confirmed the order of the Transfer Pricing Officer by holding that the Customs duty payment need not be allowed. 4. Referring to the order of the DRP, the Ld.counsel for the assessee submitted that the Transfer Pricing Officer adopted Net Profit Margin at 14.6% as benchmark as against 1.86% actually shown by the assessee. Considering the difference of 12.74% on the assessee s operating turnover, the Transfer Pricing Officer determined the downward adjustment at ₹ 30,29,38,756/-. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igher import duty, it must be passed on the customers or it must be adjusted for in negotiating the purchase price. The Ld.counsel has also placed reliance on the decision of Panaji Bench of this Tribunal in Putzmeister Concrete Machines Pvt. Ltd. v. DCIT in I.T.A. No.107/PNJ/2012 and submitted that the cost of raw material varied due to import, it will have impact for deciding the arm's length price. In fact, the Panaji Bench placed its reliance on the Pune Bench in Skoda Auto India (P.) Ltd. (supra). In view of the above, according to the Ld. counsel, the statistical method adopted by the Transfer Pricing Officer and the Dispute Resolution Panel is not one of the methods prescribed under the scheme of Income-tax Act for making adjustm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ofit indicator, i.e. gross profit margin of comparable of 35.28%. After considering the comparable companies, the Transfer Pricing Officer determined the net profit margin at 14.6%. The Ld. D.R. further submitted that for the purpose of comparison, the current year data of comparable companies alone has to be considered. The assessee, however, has taken the 3-year weighted average of the comparable companies data. According to the Ld. D.R., the economic scenario may be changing year after year, therefore, taking average of 3-years data of comparable companies would not reflect the correct net profit margin. The current period of comparable companies alone would project the real net profit margin of the comparable companies. The Ld. D.R. fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed under Section 92C of the Act, which would be appropriate to the international transaction made by the assessee. In the case before us, the Dispute Resolution Panel and the Transfer Pricing Officer have not adopted any of the methods prescribed under Section 92C of the Act. As rightly contended by the Ld.counsel for the assessee, the DRP resorted to statistical method to benchmark the international transaction. This Tribunal is of the considered opinion that the DRP is expected to find out most appropriate method among the methods prescribed under Section 92C of the Act. The Dispute Resolution Panel is not expected to travel beyond the method prescribed under Section 92C of the Act. 10. In respect of the Customs duty adjustment and wor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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