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TMI Blog2018 (1) TMI 1155X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer (AO) erred in not accepting the price of international transactions of purchases of medical devices of Rs. 27,22,69,532 shown by the Appellant and determining the Arm's Length Price (hereinafter referred to as 'ALP') at Rs. 24,66,71,869 and thereby making a transfer price adjustment of Rs. 2,55,97,663 to the Total Income of the Appellant. 2. That on the facts and circumstances of the case and in law, the Dispute Resolution Panel (DRP)/ the TPO/the AO erred in not following the directions of the Hon'ble Tribunal vide order dated 30 June 2011 for determination of Arm's Length Price of the International Transaction in their orders. 3. That the DRPI TPO/AO should have appreciated that in the matter remande ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by its group companies. The assessee purchases the devices from its AE and markets and sells its products to Hospitals in India. The TPO rejected the T.P study conducted by the assessee and carried out fresh analysis using resale price method as the most appropriate method. He arrived at the margin of the taxpayer at 16.84% and that of the four comparables at 38.45% and proposed an adjustment of Rs. 9,09,84,839. He also carried out supplementary analysis using TNMM and arrived at the arithmetic mean margin of the comparables at 15.85% as against that of the taxpayer -2%. Accordingly, draft assessment order was proposed against which, the assessee made a reference to the DRP. The DRP vide its order dated 30.09.2010, upheld the use of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fference between ALP and purchase price of international transactions after giving adequate opportunity of hearing to the assessee". 4. In order to pass the consequential order, the TPO issued a show-cause notice to the assessee to explain as to why the adjustment at Rs. 5,27,44,552 should not be made. The assessee vide letter dated 25.04.2013, contended that the ALP needs to be applied also on the unsold stock and provided its own working of the ALP. The TPO however, observed that the ITAT has remitted the entire issue to the TPO for re-determination of the ALP in accordance with Rule 10B (1)(b) of I.T. Rules and therefore, the proposal of the TPO is correct. He therefore, proposed an adjustment of Rs. 5,27,44,552. Accordingly, the draft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penses and other adjustments i.e. towards functional, economic differences and working capital at 3% of the ALP as determined by the DRP. Therefore, according to the learned AR, the DRP has erred in directing the AO to re-verify the expenses and recompute the ALP and that such directions are beyond the scope of the DRP. He submitted that the AO/TPO had to strictly follow the directions of the ITAT and to re-compute the ALP after deducting the marketing and other administrative expenses from the resale price arrived at as per directions of ITAT. 6. The learned DR, on the other hand, supported the orders of the authorities below. 7. Having regard to the rival contentions and the material on record, we find that the issue before the ITAT was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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