Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2016 (5) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (5) TMI 203 - HC - Income TaxTransfer pricing adjustment - international transactions relating to the purchases made and the royalty paid by the assessee to Keihin Corporation, Japan (hereafter "KC") - Held that:- The amounts paid were not in accordance with the agreement between the assessee and the KC is concerned, we find that no such contention had been urged by the Revenue either before the Commissioner of Income-tax (Appeals) or before the Tribunal. Therefore, in our view, no such plea can be permitted to be taken for the first time in these proceedings. The contention that the adjustment on account of expenses as determined by the Transfer Pricing Officer must be attributed entirely to the international transaction is bereft of any merits. During the financial year 2003-04 relating to the assessment year 2004-05, the assessee had reported an operating income of ₹ 72,24,22,000. The total expenses for the said period amounted to ₹ 68,00,88,000. Admittedly, the international transactions in question amounted to ₹ 15,90,66,935 which were only 23.38 per cent. in value of the total expenses. The Transfer Pricing Officer had determined the profit level indicator (operating profit over total cost) of comparable cases at 8.29 per cent. against 6.22 per cent. as declared by the assessee. Applying the profit level indicator of comparable cases, the adjusted total expenses were computed at ₹ 66,71,17,924, thus, indicating an adjustment of ₹ 1,29,70,076. As is apparent from the above, the said adjustment related to the entire expenses and not just the international transactions alone. Since the international transactions only constituted 23.38 per cent., a transfer pricing adjustment proportionate to that extent could be made in respect of such international transactions. Thus, only an adjustment of ₹ 30,33,593 could be attributed to the international transactions in question. The same was accepted by the Commissioner of Income-tax (Appeals) as well as the Tribunal. We also find no infirmity with the view of the Commissioner of Income- tax (Appeals) and the Tribunal that the assessee had acted like any other original equipment manufacturer (OEM) and could not be treated as a job worker or a contractor. - Decided against revenue
|