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2013 (10) TMI 872 - AT - Income TaxMethod for Computing Arms length Price Opportunity of Being Heard Addition under Arms Length Price Comparison of Like with Like Held that:- it is quite clear that no such addition has been ultimately made in the computation of income by the Assessing Officer and tax liability in relation to such adjustment has not been determined against the assessee - the only premise that can be drawn is that the grievances raised in the Grounds of Appeal relating to the addition in respect of international transactions of the manufacturing wire segment, as proposed by the TPO in his order do not arise out of the impugned order of the Assessing Officer passed under Section 143(3) read with Section 144C(13) of the Act - the Grounds do not require any adjudication for the present - if in future the Assessing Officer takes steps to give effect to the said addition and determine tax liability thereof, assessee shall be at liberty to appeal against such addition, if so advised in law - the Grounds of Appeal in respect of international transactions of manufacturing wire segment was dismissed as they do not arise out of order of the Assessing Officer - Decided against Assessee. Rejection of Transfer Pricing Analysis Held that:- The TPO has clearly misdirected himself in computing the transfer pricing adjustment in respect of all transactions of the assessee's Tools manufacturing segment and not limiting it to the transactions with the AEs - the entire exercise of conducting a transfer pricing analysis is to compute ALP of an international transaction alone - the adjustment that is required to be made is to be limited to the international transactions with the AEs and not to the entity/segmental level transactions Relying upon IL Jin Electronics (I) (P.) Ltd. Versus Assistant Commissioner of Income-tax , Circle-11(1), New Delhi [2009 (11) TMI 669 - ITAT DELHI] - There was enough merit in the plea of the assessee and conclude by directing the Assessing Officer to re-compute the adjustment only with regard to the transactions in the Tools manufacturing segment carried out with the AEs and not to the entire transactions in the segment which include the transactions with the non-AEs also - Decided in favour of Assessee. Opportunity of Being Heard Held that :- Following Tin Box Company vs. CIT [2001 (2) TMI 13 - SUPREME Court] - once it is established that the Assessing Officer had not given to the assessee an appropriate opportunity of being heard, that the assessee had an opportunity before the higher appellate authorities was really of no consequence, for it was the assessment order that counted inasmuch as the assessment order was required to be made only after the assessee had been allowed a reasonable opportunity of being heard - The issue of the PLI adopted by the assessee in respect of Tools manufacturing segment of Operating Profit/Operating Revenue is concerned, the same has been altered by the TPO without giving the assessee any opportunity of being heard - the matter ought to be remanded back to the AO/TPO for consideration afresh Decided in favour of Assessee. Addition made in Arms Length Price Held that:- For the purpose of determination of ALP, an international transaction has to be compared with uncontrolled and unrelated transactions by using the data relating to the financial year in which the international transaction has been entered into - the assertion of the TPO that the said concern is functionally incomparable is a mere bald assertion devoid of factual support - the action of the TPO in excluding the said concern is not well founded and is liable to be set-aside - it cannot be said that the concern is consistently loss-making and accordingly, there was not enough reasons to sustain the action of the TPO in excluding the said concern from the list of comparable - the PLI of assessee's Tools management segment is higher than the arithmetic mean of comparable margins, thus the international transactions between the assessee and the AEs in respect of Tools management segment can be considered to be at arm's length price from the Indian Transfer pricing perspective Decided in favour of Assessee. The Assessing Officer is directed to re-compute the ALP of the international transactions in respect of the Tools manufacturing segment.
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