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TMI Blog2022 (3) TMI 1491X X X X Extracts X X X X X X X X Extracts X X X X ..... nse dated 16.07.2014, taken note by the CIT(A), also justifies the claim of the assessee as the trader during the relevant assessment year. In the present case, it is also not being denied by the Revenue that the TPO has accepted the assessee as a trader for assessment year 2013 14 and 2014 15. Thus, we are of the view that the assessee has rightly been characterized as a trader by the CIT(A). Accordingly, we deem it appropriate to restore the matter to the TPO/AO to undertake fresh benchmarking of the international transaction pertaining to purchase of finished goods by considering assessee as a trader and to this extent we endorse the findings of the CIT(A). Since we are remanding the issue to the TPO/AO for conducting a fresh ben ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... benchmarking by treating the assessee as Trader to see whether any adjustment is needed on the transactions of Purchase and Technical Administrative Fees despite the amendment to provisions of section 251(1)(a) of the Act w.e.f 01.06.2001 whereby power to set-aside the appealed issue has been withdrawn? 1.3 Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in accepting the additional documents called for from assessee within the powers conferred on him u/r. 46A(4) of I T Rules, without giving an opportunity to the Assessing Officer within the meaning of provisions Rule 46A(3) of the said Rules? 1.4 Whether on the facts and circumstances of the case and in law, the Ld. CIT(A), having come to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate benchmarking of payment of Technical Administrative Fees which is in the nature of R D instead of setting aside partially the former in para 8 of his order, which is beyond his jurisdiction. 3. The brief facts of the case for deciding the appeal, as emanating from the record are: The assessee was incorporated on 23.01.2011, under the provisions of Companies Act, 1956. During the relevant assessment year, the assessee filed its return of income on 30.11.2012, declaring loss of Rs. 12,84,49,045. The assessee is a subsidiary of Toto Asia Oceanic Pte. Ltd., Singapore. The primary objectives of the assessee is to carry on the business of manufacturing, repairing, modifying, installing and trading of sanitary wares, sanitary wares access ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is a trader with normal risk with respect to its international transaction pertaining to purchase of finished goods‟. Accordingly, the assessee benchmarked its aforesaid international transaction by applying the Resale Price Method ( RPM ) as the most appropriate method. Further, the payment of trade mark license fees and technical fees relating to trading activity carried on by the assessee was also benchmarked by applying RPM as the most appropriate method. The assessee accordingly claimed that its aforesaid international transactions are conducted at arm's length price. 6. The Assessing Officer ( the AO ) made a reference to the Transfer Pricing Officer ( the TPO ) for determination of arm's length price of the afore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 50.93 lakhs only. 7. Accordingly, the TPO rejected the application of RPM as the most appropriate method and applied Transactional Net Margin Method ( TNMM ) for benchmarking the international transactions pertaining to purchase of finished goods and technical administrative fees. The TPO conducted an independent search for comparables and arrived at a set of 24 comparable companies having average profit level indicator (Operating Profit / Operating Revenue) of 10.02% as compared to operating margin ratio of assessee of (-) 108.60%. Consequently, the TPO proposed adjustment of Rs. 11,04,73,914, to the aforesaid international transactions entered into by the assessee. The AO passed the assessment order dated 26.05.2016 under section 143 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the relevant assessment year is from sale of traded goods and commission income, and no income was earned by the assessee from the manufacturing activities. Thus, the transfer pricing analysis conducted by the assessee by treating itself as a trader was wrongly rejected by the TPO. 11. We have considered the rival submissions and perused the material available on record. In the present case, it is not disputed that the relevant assessment year is the first year of operation of the assessee. From the financial statements, forming part of the paper book, it is evident that the assessee only earned Rs.9,16,35,833, from sale of traded goods and Rs.4,16,78,419 from commission income during the relevant financial year. Further, the manu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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