TaxTMI 
TaxTMI 
2019 (2) TMI 714
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....3, Mumbai erred in law and on facts in upholding the additions proposed by the learned TPO u/s 92CA of the ITA, 1961 amounting to Rs. 98,65,593/- to the taxable income of the assessee company. 2. The learned TP authorities erred in law and on facts in carrying out the revised bench marking during the TP proceedings without forming any opinion as regards 'profit passing' as required u/s 92C(3) of the ITA, 1961. 3. The learned TP Authorities erred in law and on facts in carving out & deciding the related transaction in respect to three (3) products by using CUP method as against the CPM method used by the assessee. The learned TPO & DRP erred in not appreciating that bench marking method is used for all similar trans....
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....he present appeal is against transfer pricing adjustment made at Rs. 98,65,593/-. The assessee has raised several grounds of appeal, but all relate to the aforesaid addition. 4. Briefly, in the facts of the case, the assessee for the year under consideration was engaged in the manufacturing of Automotive Fasteners and Connectors. The assessee was part of group based in France. The assessee had entered into international transactions with its associated enterprises and hence, reference was made under section 92CA(1) of the Act to the Transfer Pricing Officer (TPO). The TPO noted the assessee to have sold finished goods value of Rs. 3.70 crores to its associated enterprises and claimed it to be at arm's length price on the basis of Cos....
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....O proposed an upward adjustment of Rs. 1.33 crores. However, the TPO allowed depreciation on free mould provided by associated enterprise and proposed an upward adjustment of Rs. 98,65,593/-. The Assessing Officer issued draft assessment order, against which the assessee filed objections before the Dispute Resolution Panel (DRP), which were rejected. The Assessing Officer thereafter, passed final assessment order making the said addition in the hands of assessee, against which the assessee is in appeal before us. 5. The learned Authorized Representative for the assessee pointed out that the unit of assessee was set up in financial year 2007-08 and this was the first year of scrutiny assessment. The learned Authorized Representative fo....
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.... case and CPM is to be applied. He also pointed out that when no adjustment could be granted, then that method cannot be applied. In this regard, he placed reliance on the ratio laid down by the Hon'ble Bombay High Court in Pr.CIT Vs. M/s. Amphenol Interconnect India P. Ltd. in Income Tax Appeal No.1131 of 2015 along with other appeals, judgment dated 07.03.2018 and Pune Bench of Tribunal in Intervet India Private Limited Vs. DCIT in ITA No.720/PN/2014, relating to assessment year 2002-03, order dated 18.04.2016. 6. The learned Departmental Representative for the Revenue placed reliance on the orders of Assessing Officer / TPO. 7. We have heard the rival contentions and perused the record. The assessee in the year under consideration ....
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.... the same. The items which were compared in the case is same but the sales to non associated enterprise party were on the basis of agreement which was agreed upon in 2008, wherein the assessee was importing items and selling it to Mahindra & Mahindra. The price decided was Rs. 3.35 per component. The volume of sale to Mahindra & Mahindra was low. During the year, the assessee had started manufacturing similar items for which it had received mould from associated enterprises free of cost and after manufacturing items were sold to associated enterprise; first of all difference in volume of goods sold to associated enterprise as compared to non associated enterprise. Further, the assessee has pointed out that it acted as contract manufacturer ....
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....his regard, reliance is placed on the ratio laid down by the Hon'ble Bombay High Court in Pr.CIT Vs. M/s. Amphenol Interconnect India P. Ltd. (supra), wherein the rates of commission varied between commission paid to associated enterprises and to third parties, the Hon'ble High Court held that comparison of sale commission paid on sales made in India to sales commission paid to sales made abroad would in view of geographical differences and differences in the functions performed and in such circumstances, TNMM method was to be applied and not the CUP method as the most appropriate method to determine arm's length price of sales commission paid to associated enterprises. Another aspect noted by the Hon'ble High Court was on account of di....