TaxTMI 
TaxTMI 
2014 (11) TMI 1188
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....count of adjustment of Arm's length price of the international transaction on payment of royalty by Sakata Inx (India) to its Associate Enterprises." 2.1 Brief facts of the case are that assessee i.e. M/s. Sakata Inx (India) Ltd. is a 100% subsidiary of Sakata Inx Corporation, Japan. It manufactures printing inks for packing and printing industry. There is no change in method of maintenance of accounts, business activities etc. of the assessee during the year, as compared to the preceding year. During the year, AO observed that the assessee undertook the following international transactions with its Associates Enterprises. S.N. Description of transaction Value (in Rs.) Value (In Rs.) 1. Import of raw material, stores, ....
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....ffset and gravure ink (the registered trademarks of Sakata Japan) which was being used by Sakata India for its operations in India. The support provided by Sakata Japan for technology and product related issues consisted of the product manuals which contained full details about the products, their usage and application and manufacturing process. The emails supported the fact that technological assistance was provided by Sakata Japan to the appellant. The appellant had derived significant benefit under the royalty agreements for which it made royalty payments to its AE i.e. Sakata Japan. Almost every product manufactured by the appellant was developed from technology support provided by the AE and same would not have been possible without th....
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.... for determining arm's length price. However, the determination of ALP by the TPO using CUP suffered from certain inherent limitations. At the outset, as per Rule 10B(1)(a)(i), the price charged or paid for property transferred or services provided in a comparable uncontrolled transaction, or a number of such transactions, was to be identified. As per the Rules, the price charged in a comparable uncontrolled transaction was to be taken as an ALP. Rule 10A of the Rules defined the term 'uncontrolled transaction' as a transaction between enterprises other than associated enterprises, whether resident or non-resident. However, the TPO in the order had not provided the details of royalty paid under uncontrolled transactions. In the ....
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....acts, the final comparable set would be as follows:- S.No. Name of the Company OP/OR for F.Y. 2006-07 1. Asahi Songon Colors Ltd. 15.43% 2. Atul Ltd. 5.63% 3. Chromatic India Ltd. 1.80% 4. DIC India Ltd. 4.32% 5. Dynamic Industries Ltd. 2.44% 6. Indokem Ltd. 4.33% 7. Jaysynth Impex Ltd. 5.52% 8. Kiri Dyes & Chemicals Ltd. 9.24% 9. Metrochem Industries Ltd. 5.71% 10. Metropolitan Eximchem Ltd. 13.14% 11. Organic Coating Ltd. -0.31% 12.. Phthalo Colours & Chemicals(India) Ltd. -9.19% 13. Saraf Chemicals Ltd. 9.26% Arithmatic Mean 5.18% The arithmetic mean of the OP/OR of the comparable companie....
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.... (vi) Considering dissimilar companies as comparable companies to the appellant for determining the ALP of the international transaction. (vii) Selecting the companies having super normal profits as comparables to the appellant. (viii) Considering the incorrect margins of companies selected by the ld. TPO / AO as comparables to the appellant. (ix) Comparing full-fledged risk bearing entities with the appellant's captive operations without making any risk adjustment for differences between the functional and risk profile of comparable companies considered as comparable vis-a-vis the risk profit of the appellant. (x) Computing the ALP of software development services as the mean ALP determined wit....
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....tachi House & Life Solutions (India) Ltd. [IT Appeal No. 182/Ahd./ 2011, ITA No. 216/ Ahd./ 2011, ITA No. 1136/ Ahd./ 011 and ITA No. 184/Ahd/2011 - ITAT Ahemdabad Bench] (5) Dy. CIT v. Air Liquide Engineering India (P) Ltd. [IT Appeal No. 1040 (Hyd.) of 2011 - ITAT Hyderbad Bench]. 2.9 We have heard the rival contentions and perused the material available on record. In our considered view there is no infirmity in the order of ld. CIT(A) in as much as: (i) Ld DR could not justify the application of CUP method to Arms Length working. (ii) The products manufactured by the appellant were developed from technology support provided by the AE, it would not have been possible so without the continuous AE support. The ....