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TMI Blog2022 (12) TMI 670X X X X Extracts X X X X X X X X Extracts X X X X ..... to as 'the Appellant) respectfully craves leave to prefer an appeal against the order passed by learned Assessing Officer (ld. AO") / learned Transfer Pricing Officer ("ld. TPO (dated 13 October 2017 received on 16 October 2017) in pursuance to the directions issued by Hon'ble Dispute Resolution Panel ("DRP") (dated 23 August 2017) under Section 143(3) read with Section 144C(13) of the Income-tax Act, 1961 (the Act) on the following grounds: 1. Transfer Pricing Adjustment: INR 29,906,541/ On the facts and in the circumstances of the case and in law, the learned AO erred in making an addition of Rs. 29,906,541/- to the appellant's total income by virtue of re computation of arm's length price of the international transaction under section 92 of the Act. 2. Rejection of methodical Transfer Pricing analysis and selection of Most Appropriate Method for Benchmarking Analysis On the facts and in the circumstances of the case and in law, the ld. AO/ ld. TPO erred in and the Hon'ble DRP further erred in upholding / confirming the action of the ld. AO/ld. TPO in rejecting the Resale Price Method (RPM) considered by the Appellant and selecting the Tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessing Officer noted that assessee has entered into certain international transactions and therefore, reference was made to the Dy. Commissioner of Income tax transfer pricing, 4(2)(2), Mumbai, [The ld TPO] to determine Arm's Length Price of the international transaction. 06. Assessee benchmarked the international transaction of a. Import of finished goods adopting the resale price method taking the profit level indicator of gross profit/sales where margin of the assessee was 15.35%, margin of the third parties was 14.60%, and therefore the import of finished goods transaction was stated to be at arm's-length. b. With respect to the transaction of import of from material from clichés SA Mexico AE, assessee adopted CUP method taking the foreign AE as a tested party compared with the prices charged by the comparable companies and stated that the prices charged to the assessee is less than the price charged by them to the comparable companies and therefore same is at arm's-length. c. With respect to the transaction of import of raw material from Toreecid SA, Al fabren SA, Torrecid Suzhou, assessee adopted the foreign AES tested party adopted profit level indicator of o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the net profit and profit level indicator of the trading activity only. With respect to the selection of foreign Associated Enterprises as the tested party by the assessee, the Dispute Resolution Panel held that the Transfer Pricing Officer is right in rejecting foreign Associated Enterprises as tested party. For selection of TNMM as the most appropriate method by the TPO, where assessee has selected resale price method as the most appropriate method, for import of traded goods, assessee relied on the decision of the Hon'ble Bombay High Court, wherein adoption of resale price method with respect to distribution activities was upheld. The learned Dispute Resolution Panel rejected the same. The reasons given by the learned Departmental Representative is that assessee is in two different segments i.e. trading as well as manufacturing. Assessee imports the furnished goods as well as raw materials from Associated Enterprises. Segmented financials are also available to the gross profit level and therefore, the Transitional Net Margin Method (TNMM) adopted by the Transfer Pricing Officer is the appropriate method. It rejected the reliance on the decision of Hon'ble Bombay High Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that this issue is clearly covered in favour of the assessee by the decision of Hon'ble Mumbai High Court. He therefore stated that resale price method adopted by the assessee is the right method and hence, adjustment of Rs.2,99,00,000/- made by the learned Assessing Officer deserves to be deleted on this reason only. 013. The learned Departmental Representative supported the orders of the lower authorities. 014. We have carefully considered the rival contentions and perused the orders of the lower authorities and direction of the learned dispute resolution panel. Facts at the cost of the reiteration are stated that assessee is subsidiary of a foreign company engaged in the manufacture of products for the ceramics and glass industry. Company purchases the finished goods for distribution in India. It also imports raw material, which is used in the manufacturing activity. The international transaction shown by the assessee as Under:- serial number nature of transaction Value of the transaction Most appropriate method selected by assessee 1 Import of raw materials from Torrecid SA , Al farben SA and Torrecid Suzhou 14,02,80,914 Transactional net margin method taking ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inished products imported from the associated enterprises, as it is also engaged in manufacturing activities, therefore learned that DRP upheld the action of the learned TPO in rejecting the resale price method adopted by the assessee and transactional net margin method adopted by the TPO for benchmarking of trading segment as well as manufacturing segment of the assessee was upheld. It also rejected the reliance on the decision of the honourable Bombay High Court stating that assessee was only having trading business in that decision whereas in the issue before them, in the present assessee's case it is engaged in trading as well as manufacturing activity. We find that when the learned dispute resolution panel has concluded that assessee is engaged in two different segments (1) trading, (2) manufacturing segment. The details with respect to the gross profit level are available as depicted from the segmental accounts produced. Therefore, when it is claimed undisputedly by the assessee that with respect to the trading of goods, assessee does not undertake any value addition, we failed to understand the reasoning given by the learned dispute resolution panel in rejecting the resale p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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