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2013 (12) TMI 243 - AT - Income TaxTransfer pricing adjustment pertaining to import – Held that:- Following assessee’s own case for the A.Y. 2006-07 [2012 (1) TMI 60 - ITAT Pune] and IL Jin Electronics (I) (P.) Ltd. Versus Assistant Commissioner of Income-tax [2009 (11) TMI 669 - ITAT DELHI] - The transfer pricing adjustments are to computed not considering the entity level sales - It should be done ideally considering the relatable sales drawing the quantitative relationship to the imports from the associate enterprises, i.e. controlled cost - The principle of proportionality is relevant here - Decided in favour of assessee. Unadjusted margins on account of working capital differences – Held that:- Following the assessee’s own case for the A.Y. 2006-07 [2012 (1) TMI 60 - ITAT Pune] - After considering working capital adjustment as against the unadjusted arm’s length margin of the comparable companies adopted by the Transfer Pricing Officer - The difference in working capital materially affects, the margins of the comparable companies for the purposes of benchmarking the assessee's international transactions – The matter was restored for fresh decision. Additional expenses incurred for import of raw materials – Held that:- Following Skoda Auto India P. Ltd. v. Asst. CIT [2009 (3) TMI 249 - ITAT PUNE-A] – The issue was restored for fresh decision. Computation of Arm’s length price – Variation of 5% - Held that:- The issue was restored for fresh decision in view of amendment to section 92C made by the Finance Act, 2012. Material handling solutions – Whether Assembling/ manufacturing, sales/ distribution, providing technical and after sales services can be clubbed for benchmarking the international transactions - Held that:- It is only on account of the manufacturing activity that the activity of commissioning and installation of the equipment arises and pertinently all the aforesaid activities are negotiated and contracted for at one instance - The activity of installation and commissioning/engineering services is “closely linked” with the manufacturing activity and deserves to be aggregated and construed as a single transaction for the purposes of determining the arm’s length price as per the method adopted – In appropriate circumstances where closely linked transactions exist, the same should be treated as one composite transaction and a common transfer pricing analysis be performed for such transactions by adopting the most appropriate method - The issue was restored for fresh decision.
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