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TMI Blog2020 (12) TMI 813X X X X Extracts X X X X X X X X Extracts X X X X ..... -25(2) New Delhi [The Ld AO] passed u/s. 143(3) read with Section 144C of the income tax act 1961 [The Act] dated 28th of April 2015, was partly allowed. 2. The assessee has raised the following grounds of appeal:- 1. The order passed by the Learned Commissioner of Income Tax (Appeals) is bad in law and void ab-initio as it confirms the order of the Assessing Officer (AO) who has failed to record any valid and substantive reasons in concluding that it was expedient and necessary to refer the matter to the Transfer Pricing Officer (TPO) for computation of arm's length price, as required under section 92CA(1) of the Income-tax Act, 1961 ("Act"). 2. That on facts and in law, the CIT(A) has erred in confirming that Learned TPO/AO has d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d an Indian company. It filed its return of income declaring a total loss of Rs. 2,29,32,000 on 24/11/2011. 4. As the assessee has entered into certain international transactions, the learned assessing officer referred the matter to the learned Deputy Commissioner of Income Tax, Transfer Pricing Officer-iii(1)(1), New Delhi [The Ld TPO] for determination of the arm's-length price. The main international transaction entered into by the assessee is a purchase of traded goods amounting to Rs. 5,76,00,378/-. This is benchmarked by the assessee adopting the Resale Price Method. The assessee has stated that assessee purchased the machine tools from its associated enterprise and it has been sold for Rs. 6,31,28,791/-. However the learned asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee submitted that rejection of the resale price method used by the taxpayer is not proper and transactional net margin method could not have been adopted. Assessee submitted that it is not carrying out any value addition activities. The learned transfer pricing officer rejected the argument of the assessee and stated that the transactional net margin method is the most appropriate method in this case. The learned transfer pricing officer held that resale price margin/cost plus method is accurate when it is realised within a short time of the resellers purchase of the goods. The more time between original purchases and resale, more likely that many factor changes, like changes in market rates of exchanges, in cost etc will need to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he international transaction on the operating revenue was determined at Rs. 6,05,02,633/- against price charged by the assessee of Rs. 8,99,05,977/- and thereafter the adjustment was proposed at Rs. 2,94,03,344/- as per order u/s. 92CA on 28th of January 2015. Based on this the learned assessing officer passed the draft assessment order on 25th of February 2015 determining total income of the assessee at Rs. 64,71,044/- against the return of income filed at the loss of Rs. 2,29,32,000/-. Consequently the final order was also passed u/s. 143(3) read with Section 144C (3) of the act on 28th of April 2015 after granting the adjustment of the loss of Rs. 79,32,835 at Rs. Nil. Against this assessee preferred an appeal before The Commissioner of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the profit level indicator for resale price method the expenditure paid to these expatriates is to be treated as the expenses and AO/TPO was directed to recompute the arm's-length adjustment of international transaction for distribution functions. The appeal of the assessee was partly allowed. Therefore assessee aggrieved with the order of the learned transfer pricing officer has preferred this appeal before us. 5. Subsequently the order of the learned CIT-A assessee preferred an application u/s. 154 of the income tax act to the assessing officer who passed an order dated 14 July 2017 wherein the adjustment was reduced to Rs. 2,68,56,886/-. This adjustment has resulted because the expatriate expenses of Rs. 2,60,83,480 was considered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with Japan and to import sales training to local staff and perform all other associate assignment for smooth sales flow. With respect to the job profile of Mr. Mamarou Nagasawa it was stated that he is appointed as a vice president of the company for a period of three years. Therefore it was stated that all these employees are not at all are part of the cost for computing the PLI Under resale price method. 7. The learned departmental representative vehemently supported the order of the learned TPO and CIT-A. 8. We have carefully considered the rival contention and perused the orders of the lower authorities. It is a fact that the learned assessing officer has not challenged the order of the learned CIT-A stating that resale price method i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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