9911796707
TMI Blog2023 (2) TMI 405X X X X Extracts X X X X X X X X Extracts X X X X ..... 01. This appeal is filed by the Torrecid India Private Limited, for A.Y. 2017-18 against the assessment order passed by National Faceless Appeal Centre, Delhi (the ld. AO) on 16.02.2022 pursuant to the direction of Dispute Resolution Panel dated 18.01.2022 u/s.143(3) r.w.s. 144C (13) of the Income Tax Act, 1961 (the Act) wherein the transfer pricing adjustment of ₹ 99,31,763/- was made on account of computation of arm s length price of international transaction of import of finished goods rejecting the most appropriate method adopted by the assessee of resale price method, but the transactional net margin method adopted by the TPO. 02. The assessee has raised following grounds of appeal: Based on the facts and circumstances of the case, and in law, Torrecid India Private Limited (hereinafter referred to as the Appellant‟) respectfully craves leave to prefer an appeal against the order passed by National Faceless Assessment Centre, Delhi / learned Assessing Officer ( ld. AO ) dated 16 February 2022/ learned Transfer Pricing Officer ( ld.TPO) in pursuance of the directions issued by Hon'ble Dispute Resolution Panel ( DRP ) (dated 18 January 2022) under Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d services tailored to meet the specific need of customers in different market. 04. The assessee filed return of income on 30.11.2017 declaring nil income. The assessee has entered into international transaction of purchase of ceramic colors and glaze from associated enterprises. The assessee benchmarked this international transaction taking itself as a tested party adopting profit level indicator of gross profit ratio of trading segment. The gross profit of the assessee was 8.53%. Assessee selected 8 comparable companies computed their weighted average gross profit where 35th percentile was 4.43%, 65th percentile is 13.26% and thus, median was 5.93%. Thus, the international transaction as per transfer pricing study report was claimed to be at arm s length. 05. The Transfer Pricing Officer held that for A.Y. 2013-14, transactional net margin method was considered as the most appropriate method and therefore, same should be applied. Assessee was asked to show cause why TNMM should not be taken as most appropriate method . Assessee objected but the ld. TPO rejected the same. The ld. Transfer Pricing Officer following the consistent approach for benchmarking as adopted in A.Y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 foreign associated enterprises as tested parties 2 Import of raw materials from Chilches materials SA Torrecid Maxico 74,07,971 CUP 3 Import of finished goods from Torrecid SA and Digital Services Ceramics SL 29,09,58,928 Resale price method taking assessee as a tested party 15. Now there is no dispute with respect to the benchmarking of transaction stated at serial number 1 and 2 of the above table. 16. Only issue that remains for our adjudication is whether the transactions listed at serial number 3 being import of finished goods from associated enterprises amounting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 price method as most appropriate method and upholding transactional net margin method. According to rule 10B(1) (b) resale price methods is the method where the normal gross profit margin earned by a tested party is required to be compared with comparable uncontrolled transactions. When undeniably assessee is selling the goods imported from associated enterprises to the third parties, the resale price method is the most appropriate method, where the segmental results to the gross profit level are available. Direction of the learned dispute resolution panel in rejecting rel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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