TaxTMI 
TaxTMI 
TaxTMI 
2023 (10) TMI 1026
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....istant Commissioner of Income Tax, TPO-2(2)(l), New Delhi ("Ld. TPO") have grossly erred in assessing / upholding the assessment of loss of Appellant at INR 21,916,349, instead of returned loss of INR 69,121,104. 3. That on the facts and circumstances of the case, the Ld. CIT(A) / Ld. AO / Ld. TPO have erred in undertaking adjustments to the price of goods purchased by the Appellant from its associated enterprise ("AE") for the purposes of distribution in India. In doing so, the Ld. CIT(A) / Ld. AO/ Ld. TPO have erred in: 3.1 not appreciating the characterization of the Appellant that it is a normal risk taking distributor engaged in distribution of industrial cleaning systems; 3.2 erroneously concluding that the functional profile of the Appellant is much more than of a normal risk taking distributor; 3.3 disregarding the economic analysis conducted by the Appellant in its transfer pricing ("TP") documentation on frivolous grounds; 3.4 disregarding the application of Resale Price Method on frivolous grounds; 3.5 upholding the application of Transactional Net Margin Method ("TNMM") to determine the arm's length price ("ALP") of international transaction undertaken by th....
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....That the above grounds of appeal and sub-grounds therein are independent and without prejudice to each other. That the Appellant reserves its right to add, alter, amend or withdraw any ground of appeal either before or at the time of hearing of this appeal." 3. The brief facts of the case are; the assessee being a distributor engaged in the business of importing and resale of industrial cleaning equipment in India. The assessee imports cleaning equipment from AE and sale and distributors to local customers in India having head office at Noida, 9 Branches in India. During the Financial Year 2013-14 the assessee imported industrial cleaning machines, spares and chemicals from it's AE for the purpose of resale of the same in the Indian market. 4. The original return declaring total income of loss amounting to Rs. 6,91,21,104/- was filed by the assessee, the return was processed u/s 143(1) of the Income Tax , as the case was selected for scrutiny notice u/s 143(2) of Income Tax Act, the Notice issued u/s 143(2) of the Act was issued. In response, the assessee has participated through its Authorized Representative. 5. The case of the assessee for the year under consideration was re....
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..... 3 and its sub grounds require to be allowed by following the principles of consistency. 11. Per contra, the Ld. DR submitted that, in reply to show cause notice the assessee has identified new scheme, no mention of this was made in the TP Study Report or during virtual discussions with the understanding during the course of multiple opportunities of personal hearing that was accorded to the AR. Further submitted that, if this case of the assessee is a pure distributor and hence RPM is the most appropriate case, but the discover of 'new segment by the assessee is nothing but an afterthought and deliberate and mischievous attempt to mislead determine and this assertion done its strength from assessee's own TP Study Report. Further, the Ld. DR has also drawn our attention to TP Study Report and submitted that the order impugned requires no interference. But the Ld. DR has not brought any judicial pronouncements to contradict the order of the Coordinate Bench in assessee's own case for AY 2012-13 on the issue in hand. 12. We have heard the parties perused the material on record and gave our thoughtful consideration. The issue involved in Ground No. 3 and its sub grounds have been a....
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....et Technologies [I] Pvt Ltd. has made the following observations: "Further, we find that another reason given by the TPO/DRP for rejecting the RPM is that the assessee as per them was a fullfledged/ full risk distributor and was performing a host of functions which would involve huge costs and, hence, the said method may not represent correct gross profit margin. We are unable to persuade us to accept the said observations of the lower authorities, because, in our considered view, in a comparable uncontrolled transaction scenario also a normal distributor will undertake all such functions which are related to sales of a product viz. market research, sales and marketing, warehousing, inventory control, quality ITA No.6956/Mum/2012 M/s Video jet Technologies (I) Pvt Ltd. control etc., and would also bear risks viz. market risk, inventory risk, credit risk etc. As a matter of fact, the TPO/DRP had not placed on record instances of any such comparable which is engaged in the business of a distributor and is not performing the aforementioned functions. We are of the considered view that for the purpose of application of RPM what is relevant is that as to whether there is any value add....