TaxTMI 
TaxTMI 
2017 (6) TMI 1044
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....le Uncontrolled price (CUP) method adopted by the assessee as the Most Appropriate method (MAM) for the purpose of benchmarking its international transaction with its Associated Enterprises(AE). 3. The facts of the case as narrated in assessment year 2010-11 are that the assessee is a subsidiary of Socomec SA France and is engaged in the business of import of "Socomec" branded Uninterrupted Power Supply (UPS) from its AE's and the same is sold in India. The assessee is thus only a trading entity. The assessee also provides post sales services in connection to the UPS systems so sold by it. The assessee filed its return of income for A.Y 2010-11 on 30.9.2010 declaring loss of Rs. 3,91,97,109/-. The Assessee has during the year under considelration had adopted CUP as Most Appropriate Method (MAM) for determining the ALP of its AE purchases. The assessee had accordingly also filed detailed CUP workings before the TPO in support of its determination of ALP. The Ld. TPO rejected the CUP method so adopted by the Appellant on various grounds as mentioned in para 8 of the TPO order which are baseless, presumptuous and thus invalid. The Ld. TPO, after rejecting CUP as the MAM, suggested ....
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....of RPM. The assessee had, during assessment proceedings had also suggested use of RPM in case CUP was held to be not justified by the TPO. The assessee has during the course of hearing before the Tribunal, submitted additional evidence being fresh search of the comparable companies using Resale Price Method (RPM) analysis. 3.3 The Assessee has also in Item 5 of the Additional Evidence submitted before the Tribunal, given the corrected calculations of the Gross Profit and Gross Profit Ratio. The assessee has considered all the incomes which are integral part of the business of the assessee in calculating the GP Ratio including Service Income and Commission Income. The said incomes have also been considered by the TPO as part of Gross Profit while calculating Berry Ratio. The assessee has further excluded Import Duty paid by it as the same has to be excluded to make the resulting GP ratio comparable with other companies who have varying degrees of imports. The A.R in the light of the above facts, prayed before the Tribunal to allow the alternate RPM analysis undertaken by the assessee along with corrected Gross Profit in the interest of natural justice. 4. On the other hand, ld....
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....ason that the company is not just trader. There was also value added service by the assessee company which is a permanent factor. According to TPO, the conduct of the assessee clearly shows that it is captive for AE. For this purpose rejecting the RPM, TPO has given the reasons that the assessee has not purchased all the materials from its AE. It purchased merely 50% of the materials such as battery and other related materials from domestic market and other independent enterprises. If the RPM is considered as most appropriate method, the margin earned by the assessee to purchase the material from other independent parties is also part of the gross profit earned by the assessee, which leased to annually. 6. Before us, ld.A.R pleaded that there is no purchase from domestic market. However, this argument of the ld.A.R is contrary to the findings of the lower authorities. Hence, we are not in a position to appreciate the argument of the ld.A.R. Ld.A.R relied on the following Tribunal cases:- i) Mattel Toys India Pvt Ltd. in ITA No.2476/Mum/2008, dated 12.06.2013 ii) Danisco (India) Pvt Ltd. in ITA No.5291/Del./2010, dated 29.04.2014 iii) Star Diamond Group....
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....e scientific basis it is to be allowed, provided if the assessee has reversed the excess provisions made in the subsequent assessment years. Accordingly, we remit the issue to the file of AO to examine whether the assessee following the same method of making provisions for warranty expenses and consistent basis year to year and reverse the excess provisions in the subsequent year and decide accordingly in the light of above Apex Court decision cited supra. 9. The other ground in ITA No.617/Mds/2015 is with regard to disallowance of Rs. 1,54,892/- towards delayed payments of Employees contribution to PF and ESI, although paid before the due date of filing the return of income under Income Tax Act. 10. The facts of the issue are that the assessee had during the year deposited the Employees contribution to PF & ESI amounting to Rs. 1,54,892/- on 17.4.2010 for which the due date under the relevant PF and ESI Acts was 15.4.2010. The payment was thus delayed considering the PF and ESI statutes but was within the due date of filing the return of income as prescribed under Income Tax Act, 1961.The Id. AO ignoring the submissions of the Appellant, proceeded to make an addition of Rs. ....