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TMI Blog2024 (6) TMI 464X X X X Extracts X X X X X X X X Extracts X X X X ..... e reimbursement expenses and warranty claims are minuscule part of total transaction. The cost of reimbursement and warranty claims is merely little over 1.5% of purchase cost of solar products from AE. If the contention of Department is accepted then it would be like putting a cart before the horse. Apart from aforesaid objection, no other reason has been given by the revenue to replace RPM with TNMM. As in the case PCIT vs. Fujitsu India (P.) Ltd [ 2023 (11) TMI 289 - DELHI HIGH COURT] placing reliance on the decision of PCIT vs. Matrix Cellular International Services (P.) Ltd [ 2017 (11) TMI 1655 - DELHI HIGH COURT] that where there is no value addition made before reselling the product, RPM is the most appropriate method. Except for sus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of appeal. Ground no. 1 to 4 are in respect of a single issue i.e. adjustment of Rs. 6,94,53,296/- on account of international transaction of purchase of solar goods/lights and reimbursement of expenses and warranty cost claim. 2.1. In ground no. 5 of appeal, the assessee has assailed selection of comparables to benchmark the transactions of purchase of solar lights and goods. 2.2 In ground no.6 of appeal, the assessee has assailed adjustment in respect of interest rates. The ld. Authorized Representative of the assessee at the outset stated that, he is not pressing this ground of appeal on account of smallness of the amount involved. 2.3 Ground 7 and 8 of appeal are general, hence, require no separate adjudication. 3. Shri Hari Om Jindal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f TPO to reject RPM selected by the assessee is that the warranty claims are to be clubbed with transaction of purchase of solar goods. The ld. AR vehemently submitted that warranty claims where the goods are replaced on account of manufacturing defect is taken care of by the AEs. The warranty against manufacturing defects is given by the AE and the assessee is only a pass through entity. In support of his contention that where product is resold without any value addition, RPM is the most appropriate method he placed reliance on the following decisions: PCIT vs. Fujitsu India (P.) Ltd. 156 taxmann.com 310 (DEL) and Karcher Cleaning Systems P Ltd vs. Addl. CIT 156 taxmann.com 623 (Del Trib). 4.1. The ld.AR further contended that the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rategy including advertising marketing etc. is that of the assessee. Further, as per assessee s own submissions the replacement services are not backed by corresponding warranty by AE. The AE only takes care of manufacturing defects. Product liability and warranty risks are borne by the assessee. This fact has been admitted by the assessee in risk profile at page 113 of the paper book. In other words, rendering of services after sales is value addition made by the assessee. The ld. DR further referred to United Nations Article Manual on Transfer Pricing to contend that though product comparability is less important under resale price method, greater product similarity is likely to provide reliable transfer pricing results. He asserted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the TPO after aggregating the transactions is to be applied? 9. In so far the activity of assessee viz. purchase of solar goods and accessories from AE and its resale in India, it is not under dispute. The assessee is also providing solar warranty claims on solar goods purchased from AEs. The assessee has applied RPM to benchmark the transaction of purchase of solar goods from AE and to benchmark the transaction of warranty claims and reimbursement of expenses, the assessee has applied the other method . The TPO has aggregated the transaction of purchase of solar goods, reimbursement of expenses and warranty cost claims and has applied TNMM on aggregating transaction to benchmark the transaction. 10. We find that international transacti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... method to bench mark the transaction of purchase of solar goods. We further hold that even if the transaction of reimbursement of expenses warranty claims is aggregated with the transaction of purchase of solar goods, it would not impact the method of bench marking as the former transactions are far smaller in value as compared to later transaction of purchase of solar goods. In light of our above findings, the assessee succeeds on ground no 1 to 4 of appeal. 12. In ground no. 5 of appeal, the assessee has assailed selection of comparables. Since, we have granted relief to the assessee on method of benchmarking, this ground is left open and is not deliberated at this stage. 13. In respect of ground no. 6 of appeal the ld. AR for the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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