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DCIT, Circle-1 (1) , New Delhi Versus Akzo Noble Car Refinishes India Pvt. Ltd. (formerly known as Akzo Nobel Car Refinishes India Pvt. Ltd)

2018 (1) TMI 453 - ITAT DELHI

TPA - comparable selection criteria - Held that:- TCG Lifesciences Ltd. and Transgene Bioteck Ltd. both are functionally dissimilar. They are having intangible assets which are owned by both the companies. There is high risk involved by both the comparables. These are functionally dissimilar because they are into Pharmaceutical Industry and not in Auto Mobile Industry. Thus, both these comparables needs to be excluded. Therefore, the TPO/A.O is directed to exclude these two comparables. - Th .....

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nd ITA No. 3005/DEL/2014 - Dated:- 8-1-2018 - SHRI R. K. PANDA, ACCOUNTANT MEMBER AND MS SUCHITRA KAMBLE, JUDICIAL MEMBER For The Appellant : Sh. Yogesh Verma, CIT DR For The Respondent : Sh. Manoneet Dalal, AR, Sh. S. P. Singh, AR ORDER PER SUCHITRA KAMBLE These cross appeals are filed by the Revenue and assessee respectively against the order dated 28/2/2014 passed by CIT(A)-XX, New Delhi for Assessment Year 2007-08. 2. The grounds of appeal are as under:- ITA No. 2936/DEL/2014 (Revenue Appeal .....

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afide by the Appellant in respect of its contract research and development services ( R&D segment ), performed with due diligence and using the data available at the time of conducting the comparability analysis. 2. The learned CIT (Appeals) erred on facts and circumstances of the case and in law by confirming an Transfer Pricing adjustment amounting to INR 8,129,483 holding that the international transaction pertaining to contract R&D segment do not satisfy the arm s length principle en .....

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nd development services. 2.2. rejecting the arm s length margin computed by the Appellant for contract R&D service segment using multiple year / average data and instead of using current year data for comparable companies, i.e., data for FY 2006-07, despite the fact that the same was not available with the Appellant at the time of preparing its transfer pricing documentation. 2.3. ignoring the comparability analysis undertaken by the Appellant for its contract research and development servic .....

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differences in working capital needs to be provided. 3. The learned CIT (Appeals) erred in upholding the charging of interest under section 234B of the Act. 4. That the Appellant craves leave to add to and / or alter, amend, rescind or modify the grounds taken hereinabove before or at the time of hearing of this appeal. 4. Akzo Nobel Car Refinishes India Pvt. Ltd. (Akzo India) is a 100% subsidiary of Akzo Nobel Coatings International BV. Akzo India is into distribution and sale of car refinishe .....

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,462/- 7 Reimbursement of expenses paid CUP 2,36,774/- In the TP study, the international transactions in Distribution Segment was benchmarked by the assessee using RPM. The GP margin of the assessee is 36% as against the comparables margin of 20% using multiple year s data. In the TP study the international transactions in Contract R&D segment was benchmarked by the assessee using TNMM with OP/TC as the PLI. The margin of the assessee is computed at 5% as against the margin of the comparabl .....

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n Revenue s appeal, the sole ground is to include Choksi Laboratories from the list of comparables which was directed by CIT(A) to exclude to the A.O/TPO. 8. In assessee s appeal, the assessee challenged that the international transaction pertaining to contract R & D segment do not specify the Arm s Length Principle envisaged under the act. The assessee is challenging CIT(A) s order saying that the CIT(A) has not appreciated that the assessee s Transfer Pricing documentation is bonafide and .....

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the TPO has not at all discussed how Chocsi Laboratories will be a comparable. In-fact for Assessment Year 2005-06, the CIT(A) has excluded the same by saying that company does not have segmental information and it is engaged in diverse activities. Therefore, functionally dissimilar. The CIT(A) also in the present Assessment Year has taken cognizance of the activities carried out by the Choksi Laboratories and thereafter verifying the documents came to the conclusion that it is functionally dis .....

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ional dissimilarity there is also no separate segmental information available. Thus, on both the fronts this comparable has been rightly rejected/excluded by the CIT(A). There is no need to interfere with the findings of the CIT(A). Hence, the appeal of the Revenue on this issue is dismissed. 12. In result, appeal of the Revenue being ITA No. 2936/Del/2014 is dismissed. 13. As relates to the assessee s appeal, the Ld. AR submitted that the assessee is engaged in sale and distribution of car refi .....

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development of new colour Akzo India does not own any significant intangible and does not take any significant research and development on its account that leads to the development and non written intangible. Akzo India uses the trade marks, process and know-how technological data software, operating/quality standard etc developed, owned by Akzo Group. Akzo India Provides contract R & D services only to the Akzo Group and is compensating on the cost plus pre-determine basis and thus operatin .....

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uring diagnostic products and allied services and again in Pharmaceutical Industry. Both these companies own patent and IPR which are intangible assets. There is a high risk end for developing product for both of this companies. Therefore, these companies have to be excluded. 14. The Ld. DR submitted that the TPO has rightly included these companies and this contention was not before the CIT(A). Therefore, the appeal of the assessee be dismissed. 15. We have heard both the parties and perused th .....

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