Income Tax Appellate Tribunal - Pune
Deputy Commissioner Of Income-Tax,, vs Amphenol Internconnect (I) P. Ltd.,, ... on 12 May, 2017
आयकर अपीलीय अिधकरण,
अिधकरण पुणे यायपीठ "बी
बी"
बी पुणे म
IN THE INCOME TAX APPELLATE TRIBUNAL
PUNE BENCH "B", PUNE
ी डी.
डी. क णाकरा राव , लेखा सद य
एवं ी िवकास अव थी,
अव थी याियक सद य के सम
BEFORE SHRI D.KARUNAKARA RAO, AM
AND SHRI VIKAS AWASTHY, JM
आयकर अपील सं. / ITA No. 477/PUN/2015
िनधा रण वष / Assessment Year : 2010-11
DCIT, Circle-8, .......... अपीलाथ /
Pune Appellant
बनाम v/s
Amphenol Interconnect (I)
Pvt. Ltd., 105, .......... यथ /
Industrial Estate, Respondent
Bhosari, Pune - 26
PAN : AACCA3419J
Assessee by : Shri Nikhil Pathak & Shri Mahavir Jain
Revenue by : Shri O.A. Mao
सुनवाई क तारीख / घोषणा क तारीख /
Date of Hearing :09.05.2017 Date of Pronouncement: 12.05.2017
आदेश / ORDER
PER D. KARUNAKARA RAO, AM :
This appeal filed by the revenue is directed against the order of the AO/DRP for the assessment year 2010-11.
2. The ground, as raised by the Revenue reads as under :
"Whether on the facts and circumstances of the case, the Hon'ble DRP was justified in rejecting the CUP method adopted by TPO, which is a direct method for working out the Arm's Length of the International transaction and uncontrolled transaction; provides for instant comparison of the prices of the products/services; and when the OECD guidelines in Para 1.70 clearly suggests that 'an attempt should be made to reach a reasonable accommodation keeping in mind the imprecision of the various methods and the preference for higher degrees of comparability and a more direct and closer relationship to the transaction?2 ITA No.477/PUN/2015
3. Briefly stated, the relevant facts are that the assessee company, an Indian Subsidiary of Amphenol Corporation, Designs, Manufactures and markets electrical, electronic, fiber optic connectors, interconnector systems and coaxial and flat-ribbon cables etc. The assessee filed its return of income for the A.Y. 2010-11 on 14.10.2010 declaring total income of Rs.51,16,29,426/-. As the assessee had entered into international transactions, a reference u/s. 92CA(1) of the Income Tax Act was made to the TPO for determination of arm's length price.
4. During the course of Transfer Pricing assessment proceedings, the TPO observed from the details in respect of Export of finished goods that the assessee had charged less from the Associated Enterprises for the same products as compared to the price charged from third parties. Accordingly, the TPO applied internal CUP (Comparable Uncontrolled Price) and made adjustment of Rs.27,78,020/ - on this account. Similarly, in respect of Import of raw materials, the TPO noted that the Associated Enterprises were paid at the higher rate than the price paid to third parties in case of Import of some of the same products. Accordingly, the TPO applied internal CUP and made adjustment of Rs.17,43,232/- on this account also. Thus, the Transfer Pricing Officer passed order u/s.92CA(3) of the Income Tax Act, 1961 dated 15-01-2014 wherein an adjustment of Rs.45,21,252/- was made to the value of international transactions of the assessee company in respect of the international transactions relating to export of finished products of Associated Enterprises. In the light of the provisions of section 92CA(3) of the Act, the Assessing Officer passed a draft order u/s. 143(3) r.w.s 144C(1).
5. The assessee filed objection before the DRP and relied heavily on the order of the ITAT in assessee's own case in ITA Nos.1486/PN/2010, 3 ITA No.477/PUN/2015 1548/PN/2011 & 142/PN/2013 order dated 30-05-2014 for the assessment years 2006-07 to 2008-09. Assessee alleged that the comparables adopted by the TPO without providing adjustments to various factors are unsustainable. Adopting of CUP method as appropriate one was also contested before the DRP. Considering the order of the Tribunal, the DRP granted relief to the assessee vide its order dated 24-12-2014. Accordingly, the AO passed the final order dated 18-02-2015.
6. Aggrieved by the above relief granted by the DRP, the Revenue is in appeal before us.
7. The Revenue raised the above referred ground stating that CUP method is required to be adopted in place of TNMM method chosen by the assessee. It is the opinion of the Revenue that when direct comparability is available by virtue of comparable cases, the CUP method is found to be most appropriate method.
8. In this regard, the Ld. Counsel for the assessee brought our attention to the DRP's order dated 24-12-2014 and read out the contents of Para Nos. 3.15 to 3.17 which read as under :
"3.15 The assessee submitted that the TPO also disregarded and ignored Tribunal rulings which have laid down principles that the transactions will not be considered as similar for the purpose of benchmarking transactions under CUP method merely on account of similar products sold to AEs to third parties. These rulings are as under:
• Intervet India Private Limited Vs ACIT (ITA No.3185/Mum/2006 • ACIT Vs. Dufon Laboratiories (2010-TII-26-ITAT-MUM-TP) • Ranbaxy Laboratories Ltd. Vs. Asstt. CIT (208-TII-01-ITAT- DEL-TP) • Gharda Chemicals Ltd. Vs. The Deputy Commissioner of Income tax (ITA No.2242/MUM/06) • Schutz Dishman Biotech Pvt. Ltd. Vs. DCIT (ITA No.3590 & 3751/Ahd/2007) 4 ITA No.477/PUN/2015 • Dresser-Rand India Pvt. Ltd. Vs. ACIT (ITA No.8753/Mum/2010 AY 2006-07) • Aztec Software and Technology (ITAT Bangalore) and MSS India Pvt. Ltd., (ITAT, Pune).
• DCIT Vs. Quark Systems (P) Ltd. (ITAT No.100/Chd/2009 - AY 2004-05) and Quark Systems (P) Ltd. ITO (ITA No.115/Chd/2009 - AY 2004-05) 3.16 The assessee has submitted that for AY 2006-07, 2007-08 and 2008-09, on similar facts, the then DRP had rejected the objections of the assessee and upheld the order of the TPO. The assessee preferred appeal before the Hon'ble ITAT,Pune. The ITAT, Pune vide its order dated 30th May, 2014 has upheld the stand of the assesse and allowed its appeal against the orders of the DRP.
Findings :
3.17 We have considered the submissions of the assessee as well as the findings and order of the TPO. We have also considered the order dated 30th May, 2014 of the ITAT, Pune for the earlier assessment years 2006-07, 2007-08 and 2008-09. In the earlier assessment years, the issues involved before the ITAT were adjustments made by the TPO to some of the transactions in respect of exports and imports and payment of Commission by the assessee to its AE. The ITAT has dealt with all the three issues and given its finding in favour of the assessee. The assessee has submitted before us a note on the ITAT order and Points of similarity with the facts of the assessee's case in the current AY 2010-11. Upon going through the same, we find that the issues involved before the DRP in the current assessment year relate to adjustments made by the TPO in relation to some of the exports and imports on reasoning similar to the earlier assessment years which have now been adjudicated by the ITAT, Pune in favour of the assessee.
In the circumstances, respectfully following the ratio laid down by the Hon'ble ITAT, Pune in the assessee's own case for the earlier assessment years, the assessee's objection is allowed. Accordingly, the Assessing Officer is directed not to make any adjustment with regard to the Export of finished goods and Import of raw materials."
9. From the above, we find in principle the facts are the same. In those years too, Transfer Pricing adjustments were made to the transactions with Associated Enterprises with reference to the Export of goods and Import of the raw materials. Appropriateness of the TNMM method was also the issue in those years. Tribunal decided the issue in favour of the assessee and dismissed the appeal of the revenue on those issues. After hearing both the 5 ITA No.477/PUN/2015 sides and perusing the contents of the DRP, we are of the opinion that the order passed by the DRP with reference to the most appropriate accounting method for TP study, is fair and reasonable and same does not call for any interference. Accordingly, the ground raised by the Revenue is dismissed.
10. In the result, the appeal of the revenue is dismissed.
Order pronounced in the open court on this 12th day of May, 2017.
Sd/- Sd/-
(VIKAS AWASTHY) (D. KARUNAKARA RAO)
याियक सद य /JUDICIAL MEMBER लेखा सद य / ACCOUNTANT MEMBER
पुणे Pune; दनांक Dated : 12th May, 2017.
सतीश
आदेश क ितिलिप अ ेिषत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent
3. The CIT(A)-13, Pune
4. CIT-13, Pune
5. िवभागीय ितिनिध, आयकर अपीलीय अिधकरण, "B
Bench" पुणे / DR, ITAT, "B Bench" Pune;
6. गाड फाईल / Guard file.
आदेशानुसार/ BY ORDER,स
//True Copy//
स यािपत
ित
//True Copy//
सहायक रिज ार/Assistant Registrar
आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune