TaxTMI 
TaxTMI 
2014 (12) TMI 382
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.... * Solid resins * Formulated products 2.2. The user industries for the above products are as follows: * Paint industry * Civil Engineering Applications * Structural composites * Electrical insulation material * Adhesives * Tooling materials 2.3. A copy of the transfer pricing study report for the year ended 31st March, 2009 was furnished to the TPO on 13th January, 2012. The said report, inter-alia included * The basis for selection of the most appropriate method, in accordance with Rule 10C of Income-tax Rules, 1962 (' the Rules') and * The information and documentation as prescribed u/s. 92D(1) of the Act read with Rule 10D(1) of the Rules. 2.4. The international transactions entered into between the assessee and its associated enterprises during the A.Y. 2009-10, are summarized below: Nature of Transaction Description of Transaction Name of the Associated Enterprise Amount (Rs.) Purchase of Raw materials Import of raw materials Huntsman Advanced Materials (Australia)Pty Ltd. 11,94,229/- Huntsman Advanced Materials (Europe) BVBA 18,505,062/- Huntsman Advanced Mat....
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.... by the assessee. 4.4. We find that there is no dispute that the assessee has bought material from its AE and the pricing was done in foreign currency which means that the currency fluctuation is directly related and is inbuilt in the pricing policy which the assessee has been following with its AEs therefore, we do not find any reason or merit in excluding the same for computing the operating mark-up earned by the assessee. Therefore, we do not find any error or infirmity. The order is accordingly confirmed. Ground No. 2 is dismissed. 5. Ground No. 3 relates to the rejection of the comparable companies accepted by the assessee. First grievance relates to the rejection of Daiichi Karkaria Ltd and NLC Nalco India Ltd. 5.1. In so far as rejection of Dai-ichi Karkaria Ltd., is concerned, the DRP has followed the findings of the Tribunal in assessee's own case for A.Y. 2008-09. We find that the Tribunal in ITA No. 6217/M/2012 vide para-2 on page-6 of its order has held on the exclusion of Dai-ichi Karkaria Ltd., from the eventual list of comparable. As the DRP has followed the order of the Tribunal in assessee's own case, we do not find any reason to interfere with the finding....
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....pacity utilization. We, therefore, do not find any error in rejecting M/s. Thirumalai Chemicals Ltd., as a comparable. We, accordingly set aside this issue back to the file of the AO and the AO is directed to consider M/s. Thirumalai Chemicals as a comparable case for determining the ALP after giving reasonable opportunity of being heard to the assessee. Ground No. 3.1.2 is allowed for statistical purpose. 5.5. We further find that on the request of the TPO, the assessee had conducted a fresh search. The TPO has not considered the fresh search nor the DRP has directed the TPO. In the interest of justice and fair play, we direct the AO to also consider the comparables given by the assessee in its fresh search and consider the same as per provisions of law after giving a fair opportunity of being heard to the assessee. Ground No. 3.2 and 3.3 are treated as allowed for statistical purpose. 6. Ground No. 4.1 is of general in nature and need no separate adjudication. 7. Ground No. 4.3.1 relates to the inclusion of Gwalior Chemical Industries Ltd and Sunshield Chemicals Ltd. as a comparable companies. 7.1. Since the assessee has selected these two companies as a comparables i....
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....is M/s. Atul Ltd. As this company was part of the final comparable set for A.Y. 2008-09, we do not find any reason why the same should not be considered for the year under consideration. Ground No. 4.3.2 is accordingly dismissed. 7.8. Ground No. 4.3.3 relates to the inclusion of M/s. Pidilite Industries Ltd., as a comparable company. The TPO observed that the assessee has rejected this company on the basis of turnover filter. For the same reasons given for the inclusion of M/s. Atul Ltd., the TPO proceeded by considering this company as one of the comparable. The TPO further observed that M/s. Pidilite Industries Ltd. is also engaged in the manufacture of Epoxy Resins in earlier year also. The assessee strongly objected for the inclusion of this company stating that the turnover of M/s. Pidilite Industries Ltd. is more than approximately six times that of the assessee. Further M/s. Pidilite Industries Ltd. has identified three business segments namely consumer, bazaar products and speciality industrial chemicals and others. Therefore, M/s. Pidilite Industries Ltd. cannot be said to operate in the same scale of operations as the assessee and therefore the same should not be consi....
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....sessee did not find favour. The TPO was of the opinion that the agreements are of general in nature and do not substantiate that specific services were requested for by the assessee. The TPO finally concluded by stating that the assessee has failed to provide evidence therefore the arm's length price of such services claimed to have been received is treated as zero. 8.3. Before the DRP, it was claimed that the assessee has carried out a benefit test analysis regarding receipt of management charges, providing invoices, screenshots of services provided by AE. The DRP was of the opinion that the assessee has not provided any evidence on how the services were rendered to it by the AE. The DRP further observed that as there was no evidence, there is no other option but to treat the ALP of such transactions at Nil. The DRP relied upon three decisions of the Tribunal as mentioned at para-22 of its order. 8.4. Before us, the Ld. Counsel for the assessee strongly submitted that the action of the lower authorities are beyond the scope as there is no power to the TPO to examine the allowability or otherwise of the expenditure while making transfer pricing adjustments; 8.5. We find th....
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....09. The assessee is directed to provide segregated figures of profits earned in AE transactions and non AE transactions. This ground is treated as allowed for statistical purpose. 10. The other grounds are of general in nature and therefore needs no separate adjudication. 11. In the result, the appeal filed by the assessee is treated as allowed for statistical purpose. ITA No. 2068/M/2014 - Departmental appeal 12. The grievance of the Revenue reads as under: "1. Whether on the facts and circumstances of the case and in law, the Hon'ble DRP was correct in holding that miscellaneous income was operational income without appreciating the fact that the companies show income under the head "miscellaneous income" in their books only when the same cannot be treated as their operational income without appreciating the fact that the companies show income under the head "miscellaneous income" in their books only when the same cannot be treated as their operational income or when the same is not connected with their operations? 2. Whether on the facts and circumstances of the case and in law, the Hon'ble DRP erred in directing the TPO to consider "provisions written - back" ....