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TMI Blog2019 (10) TMI 1555X X X X Extracts X X X X X X X X Extracts X X X X ..... d:- 14-10-2019 - Sh. N. K. Billaiya, Accountant Member And Ms. Suchitra Kamble, Judicial Member For the Appellant : Sh. Rishabh, CA. For the Respondent : Ms. Nidhi Sharma, Sr. DR. ORDER PER N. K. BILLAIYA, AM: This appeal by the assessee is preferred against the order of the CIT(A)-1, Gurgaon dated 25.01.2016 pertaining to A. Y. 2011-12. 2. The grievance of the assessee read as under :- 1. That on the facts and circumstances of the case and in law, the order passed by the Learned Commissioner of Income Tax (Appeals) [ Ld. CIT(A) ] under section 250 of the Indian Income Tax Act ( the Act ) is bad in law. 2. That on the facts and circumstances of the case, the Ld. CIT(A) grossly erred in interpreting the provisions of Section 246 of the Act thereby holding the appeal as not maintainable. 3. That on the facts and circumstances of the case, the Ld. CIT(A) grossly erred in not considering the legal and factual submissions made by the Appellant in regard to the fact that the adjustment made by Ld. AO / Ld. TPO would have a futuristic impact on the income of the Appellant. 4. That the Learned Deputy Commissioner of Income Tax, Circle- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an) and Maruti Suzuki India Limited. The company is engaged in the business of manufacturing of plastic fuel tanks for motor vehicles. 4. The international transaction entered into, by the assessee are tabulated below. The table also provides the transfer pricing approach of the assessee followed by the assessee in benchmarking its international transactions. The table provides the values of the international transactions, the most appropriate method (MAM) adopted by the assessee, the profit level indicators (PLI) used by the assessee. Sl. No. Nature of Transaction Method Amount (in INR ) 1 Payment of Development Cost TNMM 19,800,000 2 Purchase of raw materials 569,242 3 Purchase of machinery 10,608,771 4 Purchase of components 89,701 5 Issue of Share Capital CUP 125,4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Master Agreement between the two entities. As per this agreement, Inergy japan has provided certain development and technical assistance services to Inergy India for which it has charged on the basis of cost plus 5% mark up'. 8. In the course of these proceedings, you were asked to provide a copy of this agreement. Vide your submission dated 4 November 2014, you have 'stated at page 4, The Assessee would like to humbly submit that it did not enter into an inter-company agreement with its AE in relation to the above mentioned transaction. Accordingly, copy of that agreement is not available with the Assessee'. 9. Since, it not appears that the reference to the agreement in your TP report is unsupported by facts, the entire analysis that you have made in the TP report with reference to this transaction stands rejected. 10. It is a settled matter that the primary onus to establish the arm's length nature of any international transaction lies upon the assessee. In your case, that onus has not been discharged. Effectively there is no analysis in existence that supports that arm's length nature of this transaction. It can be said without any doubt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t carried any benchmarking process in the international transaction related to the payment of development cost of Rs.1.98 crores and further the assessee has not been able to provide any basis of the setting of the transfer price of Rs.1.98 corres for the payment of development cost and the 5% mark up charged by the AE. 8. Having observed as above, the ALP of the international transaction related to the payment of development cost was taken at nil and accordingly income of the assessee as enhanced by Rs.1.98 crores. 9. Assessee strongly objected the adjustment before the CIT(A). However, the appeal of the assessee was dismissed by the CIT(A) as he was of the opinion that the appeal is not maintainable. Relevant findings read as under :- 3.3 I have given careful consideration to the matter and find that both the TPO and A.O have held that the international transaction of payment of development cost should be NIL which means the said payment should not have been made by the appellant to its oversea Associated Enterprises. However, for the year under consideration, the above mentioned amount has neither been claimed as revenue expenditure nor the same has been capitalized so ..... X X X X Extracts X X X X X X X X Extracts X X X X
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