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TMI Blog2024 (7) TMI 1054X X X X Extracts X X X X X X X X Extracts X X X X ..... addition and the products imported from AEs are sold in the market, therefore, consider the FAR analysis, Resale Price Method (RPM), is to be considered as a Most Appropriate Method (MAM) as adopted by the TPO. During the course of scrutiny assessment proceedings, the TPO showcaused the assessee to explain as to why Transactional Net Margin Method (TNMM), should not be rejected and RPM applied as MAM. Assessee in its reply, strongly rejected the RPM as the MAM contending absence of reliable data with respect to degree of comparability and absence of reliance date relating to gross margins earned by the comparable companies. The objections raised by the assessee were dismissed by the TPO. Comparables selected by the assessee - TPO rejected ECMAS Resins Private Limited (ECMAS) as the said company was engaged in manufacturing and sale of unsaturated polyester resins and trading component of its income is 40.06% only. Before us, the assessee had strongly contended that due to paucity of the comparables available, a trading filter range of 30%-40% should be considered as an appropriate threshold for selecting comparable companies. We are inclined to accept this contention of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TPO is directed to examine the working capital adjustment furnished by the assessee and decide this claim after offering reasonable and adequate opportunity of being heard to the assessee. To sum up, exclusion of ECMAS stands and ATTPL is directed to be excluded. With this, the TPO is directed to re-compute the Arm s Length Price adjustment, if any, after giving effect to the working capital adjustments. Assessee has also claimed for the application of external Comparable Uncontrolled Price (CUP) method as the MAM. We are of the considered view that application of any method as MAM for the determination of ALP margin depends upon the functional profile of the tested party and on the facts of the case in hand, in the light of the functional profile of the assessee RPM is the MAM. With the above directions, appeal of the assessee is partly allowed. - Shri Narendra Kumar Billaiya, Hon ble Accountant Member And Shri Rahul Chaudhary, Hon ble Judicial Member For the Assessee : Ms. Chaitee Londhe, A/R For the Revenue : Shri Nihar Ranjan Samal, Sr. D/R ORDER PER NARENDRA KUMAR BILLAIYA, AM: This appeal by the assessee is preferred against the order dt. 17/01/2024, framed u/s 143(3) r.w. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 3. Representatives of both the sides were heard at length. Case records carefully perused and the judicial decisions brought to our notice duly considered. 4. Briefly stated, the facts of the case are that the primary business of the assessee during the year under consideration is to sell and distribute fiber glass products which are manufactured by its overseas AEs. The assessee adopted both the buy-sell model as well as sales commission model depending on how the customers are acquired and maintained. 5. In the buy-sell model, assessee imports products from its overseas AEs and resells the same to the customers in India and in the sales commission model, assessee s overseas AEs sell the products to the third party customers in India directly and the assessee charges sales commission to the overseas AEs based on a certain percent of the product value of the direct sales made by the overseas AEs. 6. Considering the nature of activities and the business profile as mentioned in the Transfer Pricing (TP) study report, it can be safely concluded that the assessee is not doing any value addition and the products imported from AEs are sold in the market, therefore, consider the FAR ana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ECMAS is upheld. 10. The TPO has included Arrow Technical Textile Private Limited (ATTPL) as a good comparable. The business description of this entity as extracted from its website shows that it is a dynamically upstart company offering world-class Structural Strengthening Materials, Carbon Fibers, Basalt Fibers Products, High Strength Fiberglass, Fiberglass Product Insulation Cloth, High Silica Fibers, Filter Cloth, Non Woven Fabric and many more. Its core purpose is to provide innovative solutions in advanced industrial fiber and fabric to Indian Industry and SAARC Nations with a sustainable ecological environment commitment. Moreover, this company has a wide range of product mix which primarily deals in textile fiber and carbon fiber and fabrics and this company is offering composite fibers such as High Silica, Carbon Fiber, Basalt Fiber, Aramid, EMI (electromagnetic induction) and ESD (electromagnetic sensitive devices). The principle business activity of the company is trading in textile products. 10.1. In our considered opinion, this is entirely different from the products sole by the assessee. The assessee deals in basic glass fiber products like assemble rovings, direct r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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