9911796707
TMI Blog2024 (4) TMI 253X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment order dated 16th March, 2016, by the Asst. Commissioner of Income Tax, Circle 9(2)(1), Mumbai (the learned Assessing Officer) under Section 143(3) read with section 144C (3) of the Act, was partly allowed for statistical purposes. 02. The learned Assessing Officer is aggrieved and has raised several issues on transfer pricing adjustment as under:- "A) Relation of TNMM applied by TPO 1) The Ld. CIT (A) erred on facts and in law in holding that in rejecting the Transactional Net Margin Method (TNMM) adopted by the TPO as the most appropriate method and directing to adopt Resale Price Method (RPM) without appreciating the fact that assessee itself had adopted TNMM for its benchmarking analysis method in subsequent years i.e. A.Y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e fresh comparables submitted by the assessee during appellate proceedings. 2) The Ld. CIT (A) erred on facts and in law in accepting the new search data introduced by the assessee, ignoring the decision of Chennai ITAT in the case of SL Lumax Ltd. [2012] 22 taxmann.com 15 (Chennai) whereby it has been held that "assessee cannot be allowed to bring in a new set of comparables, for if allowed, it will result in an unending exercise since endeavour of all assessee's would be to bring the ALP within comparable range." 3) The Ld. CIT (A) erred on facts and in law in introducing certain fresh/new comparables of the assessee in her final working, viz. S. Kumar & Co. (Traders) Pvt. Ltd., Santowin Corporation Ltd., Vijay Silk House Mumbai Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the transfer pricing officer being Addl. Commissioner of Income Tax (Transfer Pricing)-1(2) Mumbai, to determine the Arm's Length Price of the international transaction. 04. Assessee entered into international transaction of import of goods of Rs. 43,73,14,940/- benchmarked it by the using resale price method as most appropriate method, compared the gross profit as ratio of direct cost of goods sold as PLI, used prowess data base, selected five comparable companies whose markup on cost was determine at 17.73% and assessee's markup was 15.93% and therefore, it was stated to be at Arm's Length Price. 05. With respect to the expenses incurred by the assessee which were reimbursed by the Associated Enterprises, it is the claim of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer held that due to intensive advertisement and marketing functions performed by the assessee, the comparable cases are not closely similar to the assessee in terms of functions performed and assets employed. He therefore rejected the resale price method as the most appropriate method. After rejecting the resale price method, the transfer-pricing officer adopted transactional net margin method as the most appropriate method and adopted profit level indicator of operating profit/operating revenue. He found that assessee has AMP to sales ratio of 12.16% and comparables with very low AMP expenditure to sales ratio of less than 3% are to be rejected. Therefore out of the five companies selected by the assessee, the TPO retained only two compar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f and selected the transactional net margin method as the most appropriate method in subsequent years and transfer pricing officer has also accepted the assessee is arm's-length price and no adjustment were made. He further found that the benchmarking under transactional net margin method was made by selecting the nine companies. He also rejected the finding of the learned transfer-pricing officer that the assessee has AMP to sales ratio of 12.16% and the comparable company with a very low AMP to sales ratio of less than 3% should not be selected. He held that in the transactional net margin method the net profit indicator is less affected by the transactional difference. He further noted that the AMP to sales ratio in assessee's ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and perused the orders of the lower authorities. Here in this case the assessee has adopted the resale price method as the most appropriate method which has been upheld by the learned CIT - A but the learned transfer pricing officer has adopted the transactional net margin method as the most appropriate method holding that assessee is incurring huge expenditure for advertisement marketing and promotion expenditure. Here, in subsequent years the assessee itself has adopted the transactional net margin method as the most appropriate method. The learned CIT - A held that resale price method is the most appropriate method but looking at the subsequent adoption of most appropriate method of transactional net margin method by the assessee itself, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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