TMI Blog2016 (5) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... 0. 12. 13 the assessee has filed the present appeal. 2. Assessee-company engaged in the business of trading in marine and protective paints filed its return of income 30. 9. 2009 declaring total income at Rs. Nil. During the assessment proceedings the AO found that the assessee has entered unto international transactions. So he made a reference u/s. 192CA(1) of the Act to the Transfer Pricing Officer(TPO)for determining Arms-Length-Price (ALP). The TPO found that PPG Industries Inc USA had its Head Quarters in Pennsylvania and had more than 110 manufacturing facilities and equity affiliates in more than 20 countries that the assessee was incorporated as a Private Ltd. company that the US company held 100% of the total share capital of the Sigma Marine and Protective Coatings Holdings B. V. Netherlands who in turn held 100% shares of the assessee. The TPO further found that the international transactions included purchase and sale of finished goods purchase of SAP licence commission income advance received cost sharing expenses reimbursement of expenses that the operating margin of the assessee was taken at 1. 2% that it had benchmarked the international transactions on an agg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 46 Average 5. 09 The TPO observed that the assessee had imported protective and marine coatings from its AE and had also sold same material to its AEs that it had aggregated the transaction of purchase and sale of finished goods with its other international transactions and had bench marked the same by considering TNMM as the most appropriate method. The TPO was of the opinion that assessee was not into trading of protective and marine coatings therefore the transaction had to be benchmarked applying Re-sale Price Method (RPM). In its replies dt. 7. 12. 2012 and 14. 12. 2012 the assessee submitted that ideally RPM should have been applied that sufficient reliable information was not available that TNMM was used as benchmark. The assessee objected to application of RPM. After considering the submission of the assessee the TPO held that a transaction by transaction benchmarking approach should be followed to the extent possible that where it was not possible a combined transaction approach could be adopted that in the case under consideration the transaction were required to be bench marked separately to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... LP of the purchase and sale of finished goods could not be considered at ALP. He computed the adjustment as under : Particulars PPG India s GM% (A) 28. 45% As submitted by Assessee Income received (B) 37 11 29 418 As submitted by Assessee COGS( C) 26 55 26 716 As submitted by Assessee Actual GM 10 56 02 702 As submitted by Assessee Arm s Length GM% (D) 31. 68 Arms Length GM(E=B*D) 11 75 73 799 Arm s Length COGS(F=B-E) 25 35 55 618 Amount of adjustment (Trading)(G=C-F) 1. 19 Crores Based on the order of the TPO the AO issued a draft order to the assessee. 3. Aggrieved by the draft order of the AO the assessee filed objections before the Dispute Resolution Panel(DRP). Before it the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of four comparable for the benchmarking at the entity level of transactions that there was no value addition at the level of the assessee that the RPM was the most appropriate method to benchmark international transaction relating to purchase and sale of finished goods that the assessee had adopted ex-post approach that it could not constrain the TPO to use the data that was available at the time of TP study. Referring to the provisions of section 92CA r. w. s. 92C(3)of the Act it was held that those sections empowered the TPO to determine the ALP on the basis of such material which was available to him that non availability of data at the time of TP study could be a reason for not considering it for the study that it could not act as a bar on use of the data subsequently by the TPO if the same was available that every selected comparable had to stand the test of FAR analysis that the TPO had used contemporaneous data of the assessee to bench mark the transactions. Finally the DRP upheld the order of the TPO. 4. Before us the Authorised Representative(AR)made the same submissions that were advanced before the DRP. He further stated that the gross margin earned by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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