TMI Blog2023 (4) TMI 284X X X X Extracts X X X X X X X X Extracts X X X X ..... 6) TMI 443 - BOMBAY HIGH COURT ], Lever India Exports Limited, Johnson Johnson Ltd. [ 2017 (3) TMI 1520 - BOMBAY HIGH COURT ] DR neither disputed the above table submitted by the assessee demonstrating outcome of the bench marking with or without adjustment made by the assessee nor brought any material against the assessee to the notice of the Bench. Thus, it is clear that that margin of the assessee are at Arm s Length without the price penetration adjustment and ad-hoc adjustment made by the TPO on account of price penetration is without jurisdiction of the TPO as held in the above case laws. Assessee appeal allowed. - I.T.A. No. 6944/DEL/2019 - - - Dated:- 6-4-2023 - DR. B. R. R. KUMAR , ACCOUNTANT MEMBER AND SH. YOGESH KUMAR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation adjustment carried out by the Appellant itself in the TP documentation has not been offered to tax and in doing so Ld. CIT(A) has erred on facts and in law by: 3.1. Not following the provisions of section 92C(4) of the Income Tax Act, 1961 ('the Act') while carrying out the transfer pricing assessment. 3.2. Not determining the arm's length price of the international transactions in accordance with the provisions of section 92C(1) and section 92C(2) of the Act and arbitrarily disregarding the economic adjustment envisaged under Rule 10B(e)(iii). 3.3. Disregarding the arm's length price as determined by the Appellant in the TP documentation in terms of section 92D of the Act read with Rule 10D of the In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f necessary economic adjustments (like working capital adjustment, capacity utilization adjustment and other economic adjustment but other than price penetration adjustment) in the computation of the arm's length price. 4.6. Disregarding the corroborative gross margin analysis presented by the Appellant. 4.7. Disregarding the corroborative CUP analysis for purchase of raw material from related parties. 4.8. Disregarding the fact that foreign exchange gain or loss should be taken as non-operating item while calculating the margin of the Appellant as well as the comparable companies. C OTHER GROUNDS: 5. Ld. AO/TPO has erred both the fact and in law in initiating penalty proceedings under section 271(1)(c) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssue of share capital 36,000,000 In respect of the above transactions, the principal activity of the assessee was manufacturing of polypropylene compound resins. The international transactions mentioned in S. No 1 to 4 listed above have been analysed by using a combined transaction approach and by comparing the net margin earned by the assessee from its manufacturing business with margins earned by other comparable companies in the same industry. Hence, it was concluded that the international transactions with the AE's is at arm s length. 4. The assessee company followed a price penetration policy wherein the produces were sold to unrelated parties at a reduced price. Accordingly, price penetration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15,24,58,920/- by sustaining an addition of Rs. 17,10,15,208/- being transfer pricing adjustment, by holding that Mitsui Prime s International Transaction does not satisfy the Arms Length Principle envisaged. 6. Aggrieved by the order of the CIT(A), the assessee preferred the present appeal on the grounds mentioned above. The Ground No. 1 2 are general in nature which requires no adjudication. The Ground No. 3 is regarding the addition made by the TPO/A.O. to the income of the assessee of Rs. 17,10,15,208/- on the ground that Price Penetration Adjustment carried out by the assessee itself in the TP accommodation has not been effected to tax and by doing so CIT(A) has erred in fact and law. 7. At the outset the Ld. Counsel for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Adjustment Original Margin .83% 3.27% Falls within the (+/-) 3% tolerance band as prescribed under the second proviso to section 92C (2) of the Act [Also Refer Annexure A to the Synopsis at Page No 5- Updated Margin (submitted during TP proceedings before Ld. TPO .83% (-) .64% At Arm's Length 2. With Ad-hoc Adjustment i.e. Price Penetration Adjustment Original Margin 10.43% 3.27% At Arm's Length Updated Margin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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