TaxTMI 
TaxTMI 
TaxTMI 
2021 (9) TMI 1465
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....rt hereinafter called "Ld. DRP") for the assessment year 2016-17. By way of stay application, the assessee also seeks stay of the outstanding demand. 2. Brief facts of the case, as could be culled out from the orders of the authorities below, are that the assessee is a 100% subsidiary company of Coim S.P.A. Coim India was incorporated on 7th June 2000. The company is engaged in trading in polyadditions (polyurethanes) products and manufacture and trading of polycondensation (ester) products and laminating adhesives for packaging industry under the brand name 'Novacote' and IMUTHANE-Hot cast polyurethane elastomers. Coim Inida also provides customer support for the direct sales made by Coim Group to India for which the company earns a commi....
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....ote' in India; and that since the profitability from payment of royalty is inter-linked with other transactions in its chemical business, the same was benchmarked within the business activities using Transaction Net Margin Method (TNMM). So also the assessee submitted that in respect of the commission, it constitutes around 0.42% of the total revenue of the assessee whereas 99.58% of the income is from the trading of chemicals, whereas a perusal of the quantum of such sales makes it clear that such sales are not undertaken as the principal business activity, but both the activities are part of the trading activities of the assessee. It was further submitted by the assessee that the same resources, namely, employees, admin resources, are int....
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....enefit was accrued to the assessee by the use of the brand 'Novacote'; that so also in respect of the commission, the reduction of the same from 4% to 1% does not fit in the expenditure and income matrix of the assessee, in as much as, in the opinion of the TPO, any person at first makes efforts in developing the market even though it incurs losses or earns meagre net margin in the initial years so that in future years it can reap the benefit and equalize its effective return over a span of time. Ld. AR submits that this contention of the TPO is rejected by the Tribunal on the ground that if the Assessing Officer is of the opinion that the expenditure incurred by the assessee does not commensurate to the business of assessee then there are ....
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....NMM as against the approach of TPO in bench marking the transaction separately, is a correct approach. 12. There is no dispute on the facts as to the assessee purchasing the material/traded goods from Coim Asia Pacific Pte Ltd. whereas the royalty to Coim SPA. Relevant agreements were produced before the authorities below to show that the assessee imported certain chemicals under the Trademark 'Novacote' and paid the royalty for use of such trademark to a separate entity and since the license owner to whom royalty is paid, namely Coim SPA is different from the seller of the material/goods, namely Coim Asia Pacific Pte Ltd., it cannot be said that the royalty is ingrained in the purchase of goods. It is also not in dispute that the commissi....
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....e credit period as 30 days and the ld. TPO suggested adjustment of Rs.9,91,252/-. 15. On this aspect, the case of the assessee is that the assessee does not charge any interest receivable by them from the AEs and it is their policy not to charge so in respect of interest both payable and receivable. It is further submitted that the interest payable by the assessee is more than the interest receivable and such interest on receivables is ingrained in sales itself, and the ld. Assessing Officer took into consideration only the interest chargeable, but did not consider the interest payable and if both the interest chargeable and interest payable are taken into consideration and set off is allowed, that would lead to no adjustment at all. 16. ....
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....are not disputed. It is not the case of Revenue that the assessee is charging interest from its AEs for any delay in payment for more than 30 days. For that matter, it is not the case of the Revenue that even in respect of non-AEs also, the assessee is charging any interest. It is the policy of the assessee, as submitted (supra) that the assessee does not charge interest either from AEs or non-AEs and accordingly does not pay interest from AEs. Further, the assessee demonstrated that as on 31.03.2016, a sum of Rs.4,79,88,545/- was receivable from AEs whereas the sum of Rs.1,65,03,11,319/- was payable by the assessee, resulting in net payable of Rs.1,60,23,22,774/- as per their books. There is nothing contrary to this averment made by the as....