TaxTMI 
TaxTMI 
2017 (12) TMI 406
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....) the Income Tax Act, 1961 ("the Act") passed by the learned Transfer Pricing Officer ("TPO"); 2. The Hon'ble DRP/AO erred in law and in circumstances by not providing any reasons for rejection of the Cost Plus Method identified as the most appropriate method by the Appellant and applying the Transactional Net Margin Method ("TNMM") for the provision of market research and testing services. 3. The Hon'ble DRP/AO erred in computing the net profit margin on the basis of the TNMM. 4. The Hon'ble DRP/AO erred in determining the Arm's Length Price for the provision of market research and testing services by the Appellant by using completely inappropriate set of companies that were engaged in a totally different line of business and industry and misconstruing the actual nature of the services provided by the Appellant. 5. The Hon'ble DRP/AO erred in upholding that the TPO followed all the required steps in identifying comparable companies viz. visiting the public database, use of appropriate filters and undertaking an appropriate Functions, Assets & Risks ("FAR") analysis. 6. That the Hon'ble DRP erred in upholding the Arm's Length Price for p....
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....g the arm's length nature of the market research and testing services. 15. The Hon'ble DRP erred in law and in facts by not giving due cognizance to the new set of appropriate comparable companies submitted by the Appellant with the Hon'ble DRP. 16. The Hon'ble DRP/AO erred in law and in facts by not giving due cognizance to the working capital adjustment under taken by the Appellant for establishing arm's length nature of the international transaction, and also not allowing any adjustment for risk. 17. On the facts and in the circumstances of the case and in law, the Hon'ble DRP erred in not directing TPO to allow a variation of 5 percent in determining the arm's length price as amended proviso to section 92C of the Act is not applicable to A.Y. 2006-07. 18. The Hon'ble DRP passed directions to the AO who denied natural justice to the Appellant by not providing an opportunity of being heard in connection with certain matters critical with the final outcome of the assessment proceedings, which finally led to an adverse conclusion against the Appellant, including failing to issue a speaking order. The Appellant prays for leave to add, alt....
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....ed as a domestic company in June 2003 to undertake research and development activity in relation to Honda Auto Mobile Power Equipment Companies in India. The Company is engaged in Research & Development of any product involved service/review/pasting of the product in the local conditions and to undertake such activities. The domestic company was loaded by Honda R & D Company Ltd. Japan as a 100% subsidiary with 100% equity being held by the above company. The research and development activity is conducted in house for the sole use of such research in the development of products in the auto mobile sector and also barely in the power product sector. The major international transactions reported in Form No. 3CEB are summarized as under:- (1) Sale of services - cost plus -17,29, 83,179/- (2) Re-imbursement of lodging, conveyance and Air Ticket-CUP-1,91,940/- (3) Re-imbursement of medical expenses - CUP - 3347/-. (4) Import of Gosoline Handy Can - CUP - 53,460/- (5) Import of variable residences - CUP - 5,53,777/- (6) Re-imbursement of custom duty and clearance charges-CUP-2,28,473/-. (7) Imported Machinery-CUP-6,30,702/- ....
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....ct Arm's Length Price for the international transaction undertaken by the assessee. Thus, an addition of Rs. 1,77,51,768/- is made to the income of the assessee being difference between the Arm's Length Price. 5. The Ld. AR submitted that this Assessment Year is already covered by the Hon'ble Delhi High Court's decision in the assessee's own case for Assessment Year 2005-06 (ITA No. 616/15, dated 2/8/2016 wherein in Para 12,13 & 26, the same is discussed and the matter was restored to the ITAT. For Assessment Year 2005-06 the ITAT passed order dated 29.01.2015. The Hon'ble High Court clearly mentioned in Para 25 that Honda R & D India Pvt. Ltd. was not into Core Research & Development Activity. Thus, the TPO's as well as DRP's finding that it is at Arm's Length Price will not sustain. As related to working capital issue, the Hon'ble High Court's order was not available before the DRP as well as TPO. Therefore, the said issue should be remanded back to the TPO after taking into consideration the order of the Hon'ble High Court. 6. The Ld. DR relied upon the order of the TPO and DRP. 7. As relates to ITA No. 5734/Del/2011 for Assessment Year 2007-08 the Ld. AR su....