2022 (8) TMI 802

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....f assessment framed by Ld. Assessing Officer [AO] u/s. 143(3) of the Act on 29-12-2006.The grounds taken by the Revenue read as under: 1. The order of the Id. CIT(A), Coimbatore is against the facts and circumstances of the case and is erroneous by law. 2. The learned CIT(A)-1, Coimbatore erred in holding that since there were no transfer pricing adjustments for the Asst. year 2005-06, 2006-07 and 2007-08 even though the assessee was in the same line of business, the adjustments for the Asst. Year 2004-05 is also not called for. 3. The learned CIT(A) failed to note that that there is no estoppel in taxation matters and the officer is not bound by the method followed in the earlier years or subsequent years. Each and every Asst. Year....

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....ference was made to Ld. Transfer Pricing Officer (TPO) for determination of Arm's Length Price (ALP). 3.2 The assessee made sale of Rs.77.34 Crores which was benchmarked using cost plus method (CPM). However, rejecting the method, Ld. TPO applied Transactional Net Margin Method (TNMM) to benchmark these transactions. The Profit Level Indicator (PLI) of the assessee was worked out at 5.72% as against average PLI of 12.98% reflected by two comparable entities and accordingly, an adjustment of Rs.609.44 Lacs was proposed by Ld. TPO. Another adjustment of Rs.35.55 Lacs was made for import of raw material since it was held that the price paid by the assessee was higher than the cost from original supplier. Therefore, rejecting Resale Price Meth....

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....y Hon'ble Karnataka High Court in CIT V/s Yokogawa India Ltd. (341 ITR 385). 3.6 The aforesaid submissions found favor with Ld. CIT(A) who deleted the adjustment on account of purchase of raw material on the ground that the assessee did not sell the products outside. Therefore, comparison of price of raw material sold by the AE to other parties could not be the basis of adjustment. 3.7 Regarding Transfer Adjustment (TP) on sale of finished goods, it was noted that the assessee was a contract manufacturer and therefore, the margins would be lower in comparison to regular manufacturer / exporter. The risk was entirely borne by overseas entities. The comparable entities as selected by Ld. TPO could not be held comparable due to difference in....