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2016 (3) TMI 718 - AT - Income TaxTransfer pricing adjustment - Berry ratio selected as most appropriate method for determining the ALP - Held that:- Considering the facts of the case we are in total agreement with the view of the Revenue on the issue of accepting Berry ratio as the most appropriate method for determining the ALP in the case of the assessee as the contention of the Revenue that the assessee is indulging in value added service to its AEs along with distribution activities is unquestionable. Since the Tribunal on several occasions has accepted the Berry ratio, the contention of the Ld. A.R. that the same cannot be applied as per Rule 10B(1C) of the Rules, is not acceptable. In the case of the assessee company it was not a routine purchase and sale transactions but immense activities were performed in order to bring awareness of the existence of the AE’s products and the AE. Therefore, the contention of the Ld. A.R. that Resale Price Method is most appropriate method cannot be accepted.We also make it clear that since the assessee had incurred abnormal expenses for specific activities conducted by the assessee for the predominant benefit of the assessee’s AEs, the decisions cited by the Ld. A.R. are rejected because in those cases only routine expenses were incurred unlike the case of the assessee. - Decided against assessee Non providing adjustments on account of differences in working capital - Held that:- DRP agreed with the view that adjustments has to be granted for eliminating material effects, if any, arising out difference in working capital between the tested party and comparables. It was the contention of the assessee that it was having negative working capital as against substantial positive working capital enjoyed by the comparables. Ld. DRP observed that the assessee has not demonstrated as to how the negative working capital of the assessee has affected its margin. Since the assessee was not able to justify the adjustments that were required to be made on account of negative working capital the Ld. DRP did not give effect to working capital adjustments. Before us also the Ld. A.R was not able to justify its stand on working capital adjustments in the case of the assessee with any tangible materials on record. Therefore, we do not have any other option but to reject the claim of the assessee - Decided against assessee Adjustments on account of foreign exchange fluctuations - Held that:- since the Tribunal on the earlier occasion has already recognized adjustments towards foreign exchange fluctuations, the same ratio has to be applied in the case of the assessee. Accordingly, we hereby direct the Ld. Assessing Officer to make adjustments on account of foreign exchange fluctuations in the case of the assessee. - Decided in favour of assessee
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