9911796707
TMI Blog2022 (12) TMI 1072X X X X Extracts X X X X X X X X Extracts X X X X ..... RPM as the most appropriate method and decide the issue accordingly. Since we have held that RPM is the most appropriate method, on the facts of the case in hand, all the other issues raised by the assessee will be decided accordingly. - ITA No. 6507/DEL/2016 - - - Dated:- 25-5-2022 - SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER, AND SHRI YOGESH KUMAR U.S, JUDICIAL MEMBER Assessee By : Shri Rohit Tiwari, Adv Ms. Tanya, Adv Department By : Shri Mrinal Kumar Das, Sr. DR ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER:- This appeal by the assessee is preferred against the order dated 20.10.2016 framed u/s 143(3) r.w.s 144C(13) of the Income-tax Act, 1961 [hereinafter referred to as 'The Act'] pertaining to Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omparable companies selected by the assessee. A summary of the operating margins of the final comparable companies selected by the TPO is as below : Company Name OP/OR Ind Tra Deco Ltd. - 5.41% Infiniti Retail Ltd. - 2.63% Orient Paper Inds. Ltd. 12.00% Average 1.32% 7. Objections were raised before the DRP wherein a partial relief was provided to the assessee by considering segmental margin earned by Orient Paper and Inds. Ltd. 8. Before us, the ld. counsel for the assessee vehemently stated that the assessee is primarily engaged in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manufacturer and distributor or that of licensor and licensee respectively. KFC is not the agent of AKW and has no right to bind AKW in any way whatsoever . 14. We further find that the TPO himself observed that the reseller generally performs the functions of advertising, marketing, distribution and guaranteeing the goods, financing the stocks and warranty risk. We find that the assessee is also performing all these functions which a normal distributor/reseller would undertake in a comparable uncontrolled transaction. 15. We are of the considered view that the extent of incurring expenses including employee costs for performing these functions is the prerogative /business decision of a company s management based on the market penetra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lated to sales of a product viz. market research, sales and marketing, warehousing, inventory control, quality ITA No.6956/Mum/2012 M/s Video jet Technologies (I) Pvt Ltd. control etc., and would also bear risks viz. market risk, inventory risk, credit risk etc. As a matter of fact, the TPO/DRP had not placed on record instances of any such comparable which is engaged in the business of a distributor and is not performing the aforementioned functions. We are of the considered view that for the purpose of application of RPM what is relevant is that as to whether there is any value addition or not to the goods purchased for resale or not. In case, there is no value addition and the finished goods which are purchased from the AE are resold in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... comparable companies does not in any manner affect the determination of ALP under RPM. 20. Similar view was taken by the Pune Bench of the Tribunal in ITA No. 235/PUN/2013. 21. Considering the facts of the case in totality, we have no hesitation to hold that the assessee is a pure trading company involved in the distribution activity without adding any value to the purchased product and hence the RPM is the most appropriate method. We, accordingly, direct the Assessing Officer/TPO to accept RPM as the most appropriate method and decide the issue accordingly. 22. Since we have held that RPM is the most appropriate method, on the facts of the case in hand, all the other issues raised by the assessee will be decided accordingly. 23 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
