TaxTMI 
TaxTMI 
2022 (3) TMI 1491
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....nt year 2012-13. 2. In this appeal, the Revenue has raised the following grounds:- "1.1 Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in directing the AO/TPO to delete the Transfer Pricing adjustment of Rs.11,04,73,914/- made by TPO on account of Purchase of finished goods and payment of Technical Administrative Fees to its Associated Enterprise in para 8 of his order and at the same breath setting aside the TP benchmarking exercise in para 10 of his order? 1.2 Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in directing the AO/TPO to do the exercise of fresh benchmarking by treating the assessee as Trader to see whether any adjust....
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....ds in Form 3CEB) which is not an issue in dispute, instead of directing separate benchmarking of Technical Administrative Fees of Rs.1,83,84,448/- which is in the nature of R&D expenditure incurred by the assessee on behalf of the AE? 1.6 Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is correct in not giving an opportunity to the TPO and not calling for a remand report from the TPO, when nothing prohibited the CIT(A) in calling for remand report from the TPO on the issues of separate benchmarking of purchase of finished goods of Rs.9,22,41,757/- with his finding of the assessee's characterization as trader as against manufacturer and separate benchmarking of payment of Technical Administrative Fe....
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....CUP 5. The assessee conducted a detailed transfer pricing analysis and came to a conclusion after considering the functions performed, assets employed and risk assumed that it is a trader with normal risk with respect to its international transaction pertaining to "purchase of finished goods‟. Accordingly, the assessee benchmarked its aforesaid international transaction by applying the Resale Price Method ("RPM") as the most appropriate method. Further, the payment of trade mark license fees and technical fees relating to trading activity carried on by the assessee was also benchmarked by applying RPM as the most appropriate method. The assessee accordingly claimed that its aforesaid international transactions are conducted at arm&....
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.... incurred total expenses on Employee Benefit expenses' amounting to Rs.924,98 lakhs, out total expenses of Rs.2931.45 lakhs (31.55%). While the 'Cost of goods sold" is only Rs.650.93 lakhs only." 7. Accordingly, the TPO rejected the application of RPM as the most appropriate method and applied Transactional Net Margin Method ("TNMM") for benchmarking the international transactions pertaining to purchase of finished goods and technical administrative fees. The TPO conducted an independent search for comparables and arrived at a set of 24 comparable companies having average profit level indicator (Operating Profit / Operating Revenue) of 10.02% as compared to operating margin ratio of assessee of (-) 108.60%. Consequently, the TPO ....
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....ssessee submitted that the relevant assessment year is the first complete year of operation of the assessee. The learned A.R. further submitted that the entire revenue of the assessee during the relevant assessment year is from sale of traded goods and commission income, and no income was earned by the assessee from the manufacturing activities. Thus, the transfer pricing analysis conducted by the assessee by treating itself as a trader was wrongly rejected by the TPO. 11. We have considered the rival submissions and perused the material available on record. In the present case, it is not disputed that the relevant assessment year is the first year of operation of the assessee. From the financial statements, forming part of the paper boo....