2014 (7) TMI 476

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....rder') passed by the Income Tax Appellate Tribunal (ITAT). 2. The grievance of the appellant/assessee is that the Assessing Officer, Transfer Pricing Officer (TPO) as well as the Disputes Resolution Panel (DRP) has not considered its functional profile while determining its character as that of a trader. 3. Briefly stated, the relevant facts are that the assessee is a wholly owned subsidiary of Mitsubishi Corporation-a company incorporated under the laws of Japan. The assessee filed its return for the assessment order 2006-07 on 29.11.2006 declaring a total income of Rs. 6,39,59,620/-. The return was taken up for scrutiny and a notice under Section 143(2) was issued on 11.10.2007. The Assessing Officer made a reference to the Transfer....

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....no dispute as to the international transactions resulting in receipts as commission and cost to cost reimbursement for rendering service, the assessee seriously contests the addition made on account of transactions of sale and purchase of goods. The assessee is aggrieved by the margin of 19.6% being applied with respect to transactions of sale and purchase. 8. It was submitted by the learned counsel that its functional profile was not that of a trader but that of a service provider. It was explained that the assessee places orders for purchase with its parent company on the basis of confirmed orders from its customers. It was submitted that in substance the assessee only front ends the transactions of its parent company. The assessee is, t....

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....in question is akin to trading activities. Thus we uphold these findings of the revenue authorities." 11. It is apparent from the order of the ITAT that the ITAT had concluded that the transaction entered into by the assessee work on principal to principal basis and that the activities were in the nature of trading. Accordingly, the ITAT has held that the activities undertaken by the assessee could not be classified as activities of a commission agent or a broker. It is not disputed that the transactions of purchase and sale between the assessee and Mitsubishi Corporation are done on a principal to principal basis. We find no infirmity with the reasoning of the ITAT that such transactions are akin to trading and cannot be considered activi....