TaxTMI 
TaxTMI 
2011 (7) TMI 964
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.... New Delhi, for determining arm's length price of international transactions entered into by the assessee with the Associated Enterprises ('AE' for short. The TPO suggested upward revision by an amount of Rs. 18,22,82,026/-. This adjustment was made by the Assessing Officer and the total income was determined at Rs. 30,70,26,936/- in the draft order. The assessee filed objections before the learned Dispute Resolution Panel, New Delhi ('DRP' for short). However, the DRP approved the draft order. Consequently, the assessment order was passed on 29.09.2010. 2. Coming to the determination of arm's length price of international transactions by the TPO, it is found that the assessee had selected transaction net margin method ("TNMM" for short)....
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....mpany Operating margin on Operating revenue(%) 1 BASF India Ltd. NC 2 Bhagiradha Chemicals & Industrial Ltd. 19.13% 3 Bharat Rasayan Ltd. 4.19% 4 Cheminova India Ltd. 7.60% 5 Devidayal (Sales) Ltd. 9.22% 6 Dhanuka Pesticides Ltd. 13.30% 7 Ficom Organic Ltd. -15.13% 8 Gharda Chemicals Ltd. NA 9 Gujaraj Agrochem Ltd. 6.59% 10 Hikal Ltd. 14.00% 11 Kilpest India Ltd. 7.96% 12 Maharashtra Insecticide Ltd. NA 13 Nagarjuna Agrichem Ltd. 13.08% 14 New Chem (India) Ltd. 4.56% 15 Phyto Chem (India) Ltd. 13.20% 16 Rallis India Ltd. 5.14% 17 Sabreo Organics Gujarat Ltd. 5.82% 18 Sudarshan Chem....
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....tment on account of capacity utilization cannot be allowed to the assessee. The assessee not furnished reasonable accurate data as per requirement of law. The assessee has not furnished appropriate documentation for carrying out above adjustment. The data from which capacity utilization adjustment can be carried out is not available on record. The data with respect to the above adjustment is not ascertainable from audited financials of the assessee. The data with respect to comparables regarding capacity utilization in the case of comparables for carrying out reasonably accurate adjustment as per requirement of law is not available. Most importantly, the reliability of the adjust preformed has not been proved by the AR of the assessee. Ther....
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....t an option for using the downward variation of 5% while determining the arm's length price. ** ** ** 6.The Hon'ble DRP has erred in law and in facts in allowing the levy of interest u/ss 234B and 234C of the Act by the Assessing Officer." 5.1 In the course of hearing before us, the assessee sought to raise an additional ground. However, the ground was not pressed by mentioning that it is only a plea, which can be taken up in the course of arguments. 6. Before us, the learned counsel for the assessee submitted that it is engaged in the business of manufacturing products, which find applications in food and nutrition, health care, apparels, homes and construction, electronics and transportation. Transfer pricing a....
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....ook between pages 310 to 316. It was represented that as per Rule 10B(3), an uncontrolled transaction is comparable to international transaction if - (i) none of the differences between the transactions are likely to materially effect the price or the cost, or profit arising from such transaction in the open market; (ii) reasonably accurate adjustment can be made to eliminate the material effect of the differences. In the light of this provision it is submitted that adjustment in respect of capacity under-utilization is necessary, as reasonably accurate adjustment has to be made in respect of difference between controlled and uncontrolled transactions. This view finds support from OECD guidelines and US transfer pricing regulations. The vie....
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....herefore, these facts need not be repeated here. The essential features are that there is no dispute regarding the most appropriate method or the PLI between the parties. The Assessing Officer has accepted the comparable cases furnished by the assessee with the difference that he has used the data of the current year. No dispute is raised before us in this matter, which is in accordance with Rule 10B(4). It is a fact that the turn over of the assessee has declined significantly in respect of the product named "Avaunt". This has happened because of utilization of BT cotton seeds by the farmers, which require very few sprays for controlling boll-worms. It is a matter of fact that fixed costs remain the same even when there is under utilizatio....