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TMI Blog2020 (7) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... ength Price' (ALP) in respect of the "International Transactions". Thereafter TPO passed order on 31.10.2017 u/s 92CA(3) wherein he computed the ALP of the "International Transactions" and suggested enhancement of income by Rs. 1,75,60,240/-. The AO thereafter, after considering the adjustment proposed by the TPO in the draft assessment order dated 16.12.2017 passed u/s 143(3)/144C of the Act determined the total income at Rs. 7,91,00,440/-. Aggrieved by the draft assessment order of AO, Assessee carried the matter before DRP. The DRP after considering the submissions of the Assessee directed the AO to complete the assessment as per the directions issued u/s 144C(5), dated 17.9.2018. Pursuant to the directions of DRP, AO vide order dated 26.10.2018 passed u/s 143(3)/144C determined the total income of the Assessee at Rs. 7,95,95,210/-. Aggrieved by the aforesaid order of AO, Aassessee is now before us and has raised the following grounds of appeal: "1. That the impugned order of Ld. Assessing Officer ["AO"] dated 26.10.2018, passed under section 144C read with section 143(3) of the Income-tax Act, 1961 ("the Act"), is bad in law and unsustainable. 2. That on the facts and circ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s adjudication is with respect to the addition of Rs. 1,80,55,010/- on account of ALP adjustment of international transaction of import of finished goods and his submissions are only with respect to the same. 5. TPO in the order has noted that assessee company is a wholly owned subsidiary of Topcon Corporation, a company incorporated in Japan and is engaged in the business of trading and service of surveying instruments. It was noted by him that assessee had entered into various international transactions, the details which are tabulated in para 3 of the order. With respect to purchase of trading goods amounting to Rs. 34,51,82,326/-, it was noted that assessee had used "Resale Price Method" (RPM) as the most appropriate method to benchmark the transaction with Gross Profit (GP) to Sales as the Profit Level Indicator (PLI). Assessee had selected 9 comparable companies for the purpose of benchmarking analysis. As per the assessee, the average Gross Profit Margin of the 9 comparable companies selected by it was at 13.14% as compared to its Gross Profit Margin of 24.59%. Since its gross profit margin was higher than the average gross profit margins of the comparable companies, it co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that during the year assessee had entered into the international transactions with its associated enterprises (AEs) on account of purchase of finished goods, purchase of promotional items, purchase of fixed assets, receipt of commission reimbursement of expenses and receipts on account of reimbursement expenses and warranty. 9. As far as the other transactions i.e. receipt of commission in respect of sales made by the associated enterprise to third party customers, purchase of fixed assets and purchase of sales promotion items are concerned, he submitted that assessee had benchmarked those transactions separately by applying TNMM method at the entity level and those have been accepted by the authorities and therefore there is no dispute with respect to it. The only dispute is with respect to the adjustment made to the purchase of finished goods (surveying instruments). He submitted that during the year assessee had purchased the surveying instruments from its associated enterprises. It had acted as the full fledged distributor and the goods that were purchased from its AE had been sold to unrelated parties without any value addition. He submitted that since the goods were purc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods. He also relied on some other decisions of the High Courts/Tribunals cited in the Synopsis that was filed by the Assessee. He thereafter, submitted that assessee has carried out similar activities of purchase of trading goods in earlier years and in subsequent year and those trading transactions were accepted at Arm's Length by applying the RPM method and no adjustments on account of ALP were made in those years by the Revenue authorities. In support of his aforesaid contention, he pointed to the order passed u/s 92CA(3) dated 31.1.2016 for AY 2012-13, order passed u/s 143(3) dated 30.3.2016 for AY 2013-14 and order dtd 15.12.2017 passed u/s 143(3) for AY 2015-16 the copies of which are placed at pages 460 to 465 of the paper book consisting of case laws. He thereafter submitted that though the principles of Res Judicta are not applicable to Income tax proceedings but at the same time, a different view is not warranted unless there are material changes in the facts and there are no material changes in the facts in the year under consideration and the other years. In support of his aforesaid contentions, he relied on the decision of H'ble Apex Court in the case of Radhasoami Sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal in case of Swarovski India Pvt. Ltd. Vs ACIT [(2017) 78 taxmann.com 325 (Del)], Mumbai Tribunal in the case of Mattel Toys India P Ltd Vs DCIT [(2013) 34 Taxmann.com 203], Delhi Tribunal in the case of Nokia (India) Pvt. Ltd.(ITA No.242/Del/2010) and Videojet Technologies (I) P Ltd Vs ACIT (ITA No 6956/Mum/2012). 17. We further find that the Pune Benches of the Tribunal in the case of ACIT vs MSS India Pvt Ltd ((2009) 123 TTJ 657 (Pune) has observed as under: "While there is no particular order or priority of methods which the assessee must follow, and no method can invariability be considered to be more reliable than others, on a conceptual note, transactional profit methods (i.e. Transactional Net Margin Method and Profit Split Method) are treated as methods of last resort which are pressed into service only when the standered methods, which are also termed as 'traditional methods', (i.e. Comparable Uncontrolled Price Method, Resale Price Method and Cost Plus Method) cannot be reasonably applied." 18. We further find that it is assessee's contentions that the purchase of trading goods undertaken by the assessee and application of Reselling Price Methods for determining t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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