TaxTMI 
TaxTMI 
2019 (8) TMI 929
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....is bad in law and liable to be quashed. Adjustment to purchase and sale of raw materials from Associated Enterprises ("AEs") (manufacturing segment) 2. That the Learned AO and the Learned Panel erred both in facts and law in confirming the action of the Learned TPO of making an adjustment to the transfer price of the Appellant with respect to the purchase and sale of raw materials from its Associated Enterprises ('AEs') by Rs. 7,78,49,035 holding that the international transactions do not satisfy the arm's length principle envisaged under the Income Tax Act, 1961 (the 'Act') and in doing so grossly erred in: 2.1. Upholding the use of data which was not contemporaneous and which was not available in the public domain at the time of conducting the transfer pricing study by the Assessee. 2.2. Disregarding all the data/evidences that were requested and duly submitted and placed on record throughout the transfer pricing assessment and making a mention in the Transfer Pricing Order that no relevant data was submitted by the Assessee. 2.3. Giving the Assessee inadequate time and opportunity to be heard and coercing the appel....
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....have erred in law and on facts, in failing to comprehend the functional profile of Elica and thereby arbitrarily rejecting the companies proposed as comparables by the Appellant such as: a) Franke Faber India Ltd. b) KAFF Appliances (India) Pvt. Ltd. c) Bajoria Appliances Pvt. Ltd. d) Glen Appliances Pvt. Ltd. e) Nirlep Appliances Ltd. 4.3. Without prejudice, in conducting the fresh search, the Learned Panel/ TPO have erred in law and on facts by resorting to cherry picking of high margin comparables. 4.4. Without prejudice the Learned Panel/ TPO have erred in law and on facts by rejecting the comparable Gorani Industries Ltd. as a persistent loss maker even though it is earning profits in the Assessment Year 2014-15. 4.5. Without prejudice, in conducting the fresh search, the Learned Panel/TPO has erred in law and on facts by manipulating the turnover filter applied by her Learned self thrice during the TP assessment in order to select the higher margin companies in the comparable set of the Assessee. 4.6. Without prejudice, the Learned AO/TPO have erred in law and facts by not applying the TNMM metho....
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....ters to be applied and selected certain concerns to be comparable with the assessee and show cause notice was issued to the assessee. The TPO rejected CPM method in final analysis in the absence of data being available of costs and both direct and indirect costs to be allocated to related and non related transactions. The assessee failed to submit details before the TPO despite several opportunities being allowed and as the assessee had failed to comply with the conditions of application of CPM method as most appropriate method, the benchmarking analysis carried on by assessee was rejected. The plea of assessee that CPM method was applied in the previous year was also rejected on the ground that no verification in this regard was made in any of the assessment proceedings. The TPO also did not find favour with the gross profit margins computed by the assessee and held that the segmental prepared by it could not be relied upon. Further, even the use of application of internal TNMM method by assessee was rejected on the ground that non-associated enterprise segment was showing losses and the associated enterprise segment was showing profits. The differences in PLI as per the TPO indic....
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....ethod or external TNMM method. The learned Authorized Representative for the assessee pointed out that the assessee was essentially a domestic seller of household goods and was importing raw material, manufacturing and selling the same in the domestic market or importing raw material, assembling the same and selling the same in domestic market. With regard to application of internal Cost Plus Method, the learned Authorized Representative for the assessee before us pointed out that the same is not pressed now. However, during the TP proceedings, the assessee had placed reliance on internal TNMM method to be applied. However, the TPO applied external TNMM method and compared the margins of assessee at 1.94% with the mean margins of comparables at 10.72%. The assessee had submitted the segmental for the application of internal TNMM method i.e. related party transactions and unrelated party transactions. It was stressed by the learned Authorized Representative for the assessee before us that no opportunity was allowed by the TPO before rejecting the said claim. Our attention was drawn to the order of TPO at pages 28 to 30, wherein the submissions of assessee vis-à-vis use of int....
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....ssessee were also low i.e. 1.94%. 7. Coming to the last ground of appeal i.e. ground of appeal No.5, which is being pressed, it was pointed out that TP adjustment, if any, is to be restricted to international transactions only. In this regard, reliance was placed on the decision of Hon'ble Bombay High Court in the case of Thyssen Krupp Industries India Pvt. Ltd. [TS-590-HC-2015(BOM)-TP] and in the case of CIT Vs. Firestone International Pvt. Ltd. reported in 378 ITR 558 (Bom). 8. The learned Departmental Representative for the Revenue on the other hand, placed reliance on the orders of authorities below. 9. We have heard the rival contentions and perused the record. First of all, ground of appeal No.1 raised by assessee is general in nature and the same does not require any adjudication. The ground of appeal No.3 is not pressed and hence, the same is dismissed as not pressed. The grounds of appeal No.6 and 7 are premature and hence, the same are also dismissed. The ground of appeal No.8 against charging of interest under section 234B of the Act is consequential, hence the same is also dismissed. 10. Vide ground of appeal No.2, the assessee has raised the issue of transf....
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.... in hobs, cooking ranges, cook-tops, etc. The most appropriate method which needs to be applied was the TNMM method. The next step is in order to determine whether the arm's length price of international transactions of assessee, the selection of comparables. First of all, the TPO had selected four concerns as comparables whose mean margins worked out to 10.72%. The TPO has revised the list of comparables and the only two concerns remained in the final list of comparables i.e. Acrysil Ltd. and JSL Life Style Ltd. The assessee had suggested certain additional companies to be accepted as comparables, which were not accepted by the TPO or DRP and the same were rejected. 12. The case of assessee before us is that since it was engaged in the business of kitchen appliances, the concerns which have to be finally selected for comparison should also be in the similar line of business. With regard to Acrysil Ltd., the learned Authorized Representative for the assessee has pointed out that the said concern was engaged in the manufacturing of sinks and faucets and the raw material which was used for them was quartz; whereas the assessee was engaged in absolutely different line of manufa....