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2017 (8) TMI 1355 - AT - Income TaxAddition on account of Arm's Length Price - comparable selection - Held that:- Itochu Corporation, Japan ("ICJ") is a trading organization in Japan and is engaged in trading of various products such as textiles, machinery, information and communications related products, meals, products related to oil and other energy resources, general merchandise, chemicals, provisions and food. IIPL was incorporated as a wholly owned subsidiary of ICJ to render business support services to its AEs in the nature of facilitation services to source goods from India. The TPO failed to appreciate that the Assessee has not undertaken the activity of purchase and resale. Further, the companies adopted by the TPO as comparable are undertaking trading operations which is not comparable to the inter-company transactions undertaken by the Assessee. The TPO has artificially enhanced the cost base on the Assessee and proposed a mark-up on the FOB value of goods sourced by AEs, such approach does not correspond to any one of the five methods, as provided under the ACT. Assessee has earned a net operating profit margin on cost of 110.91% and 123.52% for AY 2007-08 and 2008-09, respectively. Computation of an adjustment (over and above the existing remuneration) to the tune of INR 6,53,22,520 and INR 9,69,43,894 by the TPO for the relevant AYs, has required the Assessee to earn an NCP of 202.35% and 246.09% for AY 2007-08 and 2008-09, respectively is practically impossible to achieve. These contentions taken by the Ld. AR are accepted. The Revenues appeal agitating the issue of deletion of the addition made on account of Arms Length Price related to FOB value of cost is similar to the case of GAP International Sources India Pvt. Ltd. [2012 (9) TMI 766 - ITAT DELHI] - Decided in favour of assessee.
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