Income Tax Appellate Tribunal - Ahmedabad
Pino Bisazza Glass Pvt.Ltd., Mehsana vs Assessee on 10 April, 2013
IN THE INCOME TAX APPELLATE TRIBUNAL
"D" BENCH, AHMEDABAD
BEFORE SHRI MUKUL Kr.SHRAWAT, JUDICIAL MEMBER AND
SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER
ITA No.1690/Ahd/2010 & 1622/Ahd/2010
For AY:2005-06
Pino Bisazza Glass Vs Asstt. Commissioner of
Private Limited Income Tax (OSD),
23-D, GIDC Estate, Circle-5, Ahmedabad
Kadi, Mehsana -
382715
PAN: AABCP8041Q
(Assessee) (Revenue)
ITA No. 3201/Ahd/2011
For AY:2007-08
Pino Bisazza Glass Vs Asstt. Commissioner of
Private Limited Income Tax (OSD),
23-D, GIDC Estate, Circle-5, Ahmedabad
Kadi, Mehsana -
382715
PAN: AABCP8041Q
(Assessee) (Revenue)
Revenue by : Shri D.P. Gupta,CIT
D.R.& Mr. Anurag Sharma
DCIT, TPO/DR
Assessee(s) by : Shri Suhail Dutt & Shri
Sanjay R. Shah, A.R.
सुनवाई कȧ तारȣख/
/ Date of Hearing : 10/04/2013
घोषणा कȧ तारȣख /Date of Pronouncement: 28/06/2013
आदे श/O R D E R
PER SHRI MUKUL Kr. SHRAWAT, JUDICIAL MEMBER :
A) ITA 1690 & 1622/Ahd/2010 (A.Y. 2005-06):
These are cross appeals arising from certain orders of the Revenue Authorities as listed below:
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1. An order under Section 92CA(3) of IT Act dated 20th of October, 2008 passed by the TPO.
2. Order under Section 143(3) read with Section 92CA(3) dated 19.11.2008 passed by AO (DCIT).
3. Order of CIT(A)-XI, Ahmedabad dated 8th March, 2010.
We shall first deal with the appeal filed by the assessee.
a). ITA No.1690/A/2010 ( A.Y. 2005-06) (Assessee's Appeal)
2. Grounds No.1 and 2 are reproduced below:
"1. The order passed by the learned CIT(A) is erroneous and contrary to the provision of law and facts of the case and therefore requires to be modified.
2. The learned CIT(A) erred in rejecting Appellant's contention that the Assessing Officer (AO) failed to issue show cause notice and thus violated principles of natural justice."
2.1. At the outset, we have been informed that no specific issue has been raised in these grounds and these grounds are general grounds, therefore no particular legal adjudication is needed, hence, these are hereby dismissed.
3. Ground No.3 is reproduced below:
"No intention of shifting profits The learned CIT(A) has erred in law and on facts by not appreciating the fact that as the Associated Enterprise has incurred losses, the Appellant has not incentive and intention to shift profits outside India."
ITA No.1690 &1622/Ahd/2010 &3201/Ahd/2011 Pino Bisazza Glass Pvt. Ltd. Vs. ACIT, C-5, Ahmedabad 2005-06 & 2007-08 -3- 3.1 The only contention of the assessee is that the Associate Enterprise (in short A.E.) Trand Group SPA has suffered losses, therefore, there was no intention of shifting of the profit outside India. We have examined this aspect carefully. The IT Act has prescribed Chapter X, incorporating therein, special provision relating to computation of income from International Transaction having regard to Arm's Length Price (in short A.L.P.). The Chapter applies where in an international transaction the Associated Enterprises (A.E.) enter into a mutual agreement or arrangement for the allocation or apportionment of any cost or expense incurred then such allocation or apportionment is to be determined having regard to the Arms Length Price. Rather sub section (3) of Section 92 is very specific that these provisions are applicable to the assessee in India because in case the effect of such adjustment reduces the income chargeable to tax or increases the loss then no such adjustment is required in the case of the said Indian entity. Thus, an analogy can be drawn that the entire Chapter X in the I.T.Act is devoted to determine the Arms Length Price in respect of a cross border transaction made by an Indian entity, which is to be taxed in India. Whether the said foreign A.E. is having losses, or otherwise not benefitted in any tax savings in that country, is not the matter of examination in this Chapter-X of IT Act. We therefore hold that this ground being not in line with the intention of the legislation, thus erroneously raised, hence hereby dismissed.
4. Ground No.4 is reproduced below:
"Erroneous rejection of Appellant's economic analysis ITA No.1690 &1622/Ahd/2010 &3201/Ahd/2011 Pino Bisazza Glass Pvt. Ltd. Vs. ACIT, C-5, Ahmedabad 2005-06 & 2007-08 -4- The learned CIT(A) has erred in upholding the rejection of the economic analysis and comparable companies adopted by the Appellant without providing any valid reasons by the AO."
4.1 For bench marking its international transaction, the assessee has selected Transactional Net Margin Method (TNMM) as the most appropriate method. The assessee had chosen 12 comparables as is mentioned by the TPO in the order passed under Section 92CA(3) of the IT Act dated 20th of October, 2008. Assessee has compared its profit margin with those comparables. The assessee's contention is that in a situation when the most appropriate method was undisputedly selected was TNMM method , then the deployment of assets and risks undertaken should only have been compared. The assessee has compared the Operating Margin (O.M.) with the margin of the glass industry. Since, the assessee as well as the TPO, both have chosen profit based comparison, therefore, the functional comparability was required to be made, contended before us. It is argued that the most appropriate method was not the comparison of "uncontrolled price method" or "cost plus method". These methods are basically price based comparison therefore the comparability of a product was required to be made. Whereas in a situation when the Revenue as well as the assessee have chosen not to determine A.L.P. merely on the basis of the comparability of the product, then, it was not proper to erroneously reject the economic analysis of those comparable instances, is one of the major objection of the assessee.
4.1.1) This objection was further elaborated by Ld. A.R. Mr.Suhail Dutt that once the assessee has chosen the comparable cases, then it ITA No.1690 &1622/Ahd/2010 &3201/Ahd/2011 Pino Bisazza Glass Pvt. Ltd. Vs. ACIT, C-5, Ahmedabad 2005-06 & 2007-08 -5- becomes the duty of TPO to find whether these cases are in fact comparable or not. Ld.A.R. has emphasized that the comparison can best be adjudged by FAR analysis. By placing reliance on an unreported decision of Mumbai Tribunal in the case of Bayer Material Science Pvt. Ltd. (ITA no. 7911/Mum/2010) he has pleaded that if the TPO was not satisfied as to the comparability of assessee's examples then he should have given a logical reason. Merely by stating that the product was not identical the TPO has summarily rejected the assessee's comparables, according Mr. Dutt. The allegation of ' cherry-picking' is also baseless. The TPO was duty bound to prove the allegation. He was required to reject each of the comparable instances as selected by the assessee. The TPO was first supposed to empty the basket of comparables of the assessee. As the exercise of determining ALP is inconceivable without any comparable case therefore the TPO is then expected to do his search. But in the present case after emptying the basket of comparables as selected by the assessee, without assigning case-wise reason, the TPO himself had done cherry-picking by selecting only one comparable i.e. BIPL. Ld. Voluntary selection of comparable is within the TPO's power, but it not his duty. If in the present case the TPO was not in a position to gather the comparable instances then it was within his power to accept the comparables of the assessee. In the present case since it was noted by the TPO that the product of the assessee is not so common then he should have exercised his discretion, being empowered to do so, rather then arbitrarily selecting only one company. Ld. A.R. has then tried to justify the basis of assessee's selection by mentioning their product profile as under:-
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a) Gujarat Borosil Ltd. : The company manufactures high quality, state of art glass sheet for application in the manufacturing industry.
Therefore TPO's rejection of Company on the ground that companies selected in Glass bottles , kitchen glass wares and therefore rejcting comparables companies as whole is not correct.
b) IAG Co. Ltd. : The company manufactures quality figured glass used in interior decoration and construction, which is similar to the application of product made in the case of the appellant company.
c) Trivani Glass Ltd. : The Company manufactures quality figured glass used in interior decoration and construction, which is similar to the application of product made in the case of Appellant Company. The Company cannot be described as engaged in glassware and kitchen bottle products as wrongly stated by the learned TPO in his order.
4.1.2) The assessee's counsel has also informed that in A.Y. 2008-09 (order dated 28.10.2011 ref. para 8) the TPO had accepted the selection of Gujarat Borosil ltd. Hence it is emphasized by Ld.A.R. that the functional similarity is utmost important. Reliance is placed on Aztec Software & Technology Service Ltd. 107 ITD 141 ( Bang.Trib.) wherein it is said that locating identical transaction is not an easy task, hence ALP is to be determined by taking comparable transactions in comparable circumstances and making suitable adjustment. Accordingly assessee's case is that comparables selected are most close comparable transaction in comparable circumstances, in short, this is the submission of A.R. On that basis he has emphasized on 'functional similarity' rather than 'product similarity'. Ld. A.R. has tried to convey ITA No.1690 &1622/Ahd/2010 &3201/Ahd/2011 Pino Bisazza Glass Pvt. Ltd. Vs. ACIT, C-5, Ahmedabad 2005-06 & 2007-08 -7- that where similar functions are undertaken then in an uncontrolled transaction that comparability analysis is sufficient and should be accepted, instead of chasing the uncontrolled transaction involving identical product. For instance, as per Mr. Butt, in the case of ALP of distributor of 'consumer goods' a similar economic characteristic is good enough for comparability study, instead of searching for a similar product.
4.1.3 ) Two more points has been raised by Mr. Butt. First , that the TPO must identify the infirmity in the selection of assessee's comparables, reliance placed on Philips Software Centre Pvt. Ltd. 119 TTJ 721 ( Bang.Trib.). Second, that TPO is authorized to carry fresh search only if there is any deficiency pointed out in assessee's comparables, reliance is placed on Mentor Graphics Noida Pvt. Ltd. 109 ITD 101/ 112 TTJ 408 ( Del. Trib.).
4.1.4) On the issue of rejection of economic analysis of the assessee Ld. A.R. has quoted Rule 10D(2) for the legal proposition that this Rule prescribes that the reliability of the data used by the assessee is necessarily required to be examined by the TPO, but only on the basis of the material with the assessee, not beyond that. Even at the out-set we are not convinced because of the existence of sub-rule (2) which says, quote: " Nothing contained in sub-rule(1) shall apply in a case where the aggregate value , as recorded in the books of account, of international transaction entered into by the assessee does not exceed one crore repees" unquote. Further as per the PROVISO " Provided that the ITA No.1690 &1622/Ahd/2010 &3201/Ahd/2011 Pino Bisazza Glass Pvt. Ltd. Vs. ACIT, C-5, Ahmedabad 2005-06 & 2007-08 -8- assessee shall be required to substantiate, on the basis of material available with him, that income arising from international transaction entered into by him has been computed in accordance with section 92." Therefore on reading these clauses it is evident that the condition apply to small value transaction being less than Rs.1cr. Secondly the assessee has been affixed with a statutory obligation to substantiate the basis of international transaction. This Rule has therefore no role to play on the case of the assessee since the impugned international transaction has exceed the limit of Rs. 1Cr.
4.2) An another point has also been raised that the T.P.O. had not maintained the rule of consistency. In this connection it is informed that for A.Y. 2008-09 vide an order dated 28.10.2011 the comparable companies selected by the assessee were accepted by the T.P.O. The TPO himself has accepted five companies as comparable from the glass industry. Those very 5 companies are now in consideration for A.Y. 2005-06 as comparable. Thus the argument before us is that the comparable cases accepted by the Department in the subsequent assessment year should be adopted for the current year . Few unreported decisions are relied upon.
4.2.1) From the side of the Revenue Dept. Ld. D.R. Mr. Anurag Sharma has responded that the bench-marking exercise carried out for any particular period is an extensively fact based exercise for that particular year. Any minor change may lead to entirely different result. He has submitted that there may be case in which an entity may be ITA No.1690 &1622/Ahd/2010 &3201/Ahd/2011 Pino Bisazza Glass Pvt. Ltd. Vs. ACIT, C-5, Ahmedabad 2005-06 & 2007-08 -9- having comparable transactions, but may not be having relevant operations in an another year. In such a scenario, the entity can never be considered as comparable. In continuation of his argument Ld. D.R. has also cited OECD guidelines. Rather he has objected that the Ld.A.R. has quoted only truncated portion of the Guidelines, so the full text was also referred.
4.3) Having heard these submissions we have noted that undisputedly the assessee had given twelve comparable instances but it was noted that those instances were in respect of companies in the production of 'glass products'. As against that the assessee had manufactured 'glass mosaic'. Although it was informed that there was no major player in the glass mosaic sector but the Revenue Department has selected a comparable instance and bench marked the international transaction against Bisazza India Pvt. Ltd.( in short BIPL ). Although, it is correct that while adopting TNMM method only profit based comparison is advisable, but the start point for every comparison is the product which is the subject matter of international transaction. In our understanding, the logical procedure ought to be to first select the identical product and then the next step should be to compare the economic analysis. Otherwise, on this primary difference of the product, the entire exercise of economic analysis should get rejected. Meaning thereby, the importance of the product cannot be ignored. If the suggestion of the assessee is accepted then a very strange situation may arise that the comparison is to be made only in respect of the profits of the comparables ignoring the product. That comparison, in our view, is not at all worthy. Because the fundamental start point for comparison is ITA No.1690 &1622/Ahd/2010 &3201/Ahd/2011 Pino Bisazza Glass Pvt. Ltd. Vs. ACIT, C-5, Ahmedabad 2005-06 & 2007-08
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the similarity amongst the nature of transaction, which depends upon none other than the transaction of product. Without first establishing the similarity of the product between two comparable how is it practically possible to judge the FAR ? If the nature of transaction is dissimilar in product then that should lead to an incongruous result. The economic analysis, therefore, of comparable companies as attempted by the assessee was not proper in the eyes of law primarily because of the reason that those companies were admittedly manufacturing ' glass wares' and not 'glass mosaic', particularly when the revenue department was in a position to lay hand to compare the transaction of the assessee with a comparable company also dealing in glass mosaic. This product is undisputedly identical with the product of the assessee manufactured. Without first establishing the proximity of the products it is difficult to hold that the comparables are from the same economic segment. And without having intimate economic segment the quoted companies can not be treated as "comparables". In the sequence of preference it is incorrect to hold that the 'functional similarity' is to be preferred over and above the 'product similarity'. Resultantly we hereby hold that on the issue of dissimilarity of the product in the 12 comparables selected by the assessee, as a first step, the TPO has rightly rejected the economic analysis of the assessee.
4.4) An another issue pertaining to the consistency has been raised. But the fundamental flaw in this argument is that the consistency is required to be maintained vis a vis the past history, but not with any future view. How the TPO could apprehend any future decision of A.Y. ITA No.1690 &1622/Ahd/2010 &3201/Ahd/2011 Pino Bisazza Glass Pvt. Ltd. Vs. ACIT, C-5, Ahmedabad 2005-06 & 2007-08
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2008-09( order dated 28.10.2011) , while finalizing the question of selection of comparables in A.Y. 2005-06 ( order dated 20.10.2008) or A.O. passing the order u/s 143(3) r.w.s. 92 CA(3) dated 19.11.2008 . Even otherwise all those facts are not before us so as to verify what filters were applied by the TPO in A.Y. 08-09. Rather the issue of consistency for this year is raised in reverse direction therefore not convincing, hence rejected. Moreover the mandatory requirement is to use contemporaneous documentation because such exampleobviously reflect alike/ akin economic condition. Having common economic sense it is easy to mention that the use of current financial year data is more relevant as well as appropriate. The economic data and financial transaction of that very period always has higher degree of comparability, but it must an uncontrolled transaction so as to arrive at the ALP. Ex- post analysis or documentation can be used as a supplement but can not substitute the initial contemporary documentation. In the case of ACIT vs. Birlasoft Ltd. 47 SOT 437 it is held that the expression 'shall' used in Rule 10B(4) makes it abundantly clear that the current year data of an uncontrolled transaction is to be used for the purpose of comparability, while examining international transaction with an A.E. Rather in the case of Exxon Mobil Co. 46 SOT 294 it is held that the previous year data can be used only when it had influenced the current year price. Hence the suggestion of placing reliance on the TPO's selection for A.Y. 2008-09 is hereby rejected.
4.4.1) We would further like to append that relevant operation/s of a particular year are the only criteria for starting a comparison process.
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Although the selection of "Industry Segment" is the start point but it is a broad selection, particularly if a finer or more close selection is available. We are aware about Para 1.41 of OECD guidelines which prescribes that it is acceptable to broaden the scope of the comparability analysis to include uncontrolled transaction involving products that are different, but where similar functions are undertaken. But the OECD guide lines have not stopped there and said that the acceptance of such an approach depends on the effects that the product differences have on the reliability of the comparison and on whether or not more reliable data are available. It is rather clarified that before broadening the search to include a large number of potentially comparable uncontrolled transactions based on similar functions being undertaken, thought should be given to whether such transaction are likely to offer reliable comparables for the controlled transaction. Therefore the Guidelines are unambiguously suggesting that 'comparability factor' do not restrict to 'functional analysis' and the importance of FAR as a major comparability factor can't be over emphasized but one needs to carry out the process again and again till the exactly reliable comparable is found.
4.5) Next, the contention of the assessee is based upon a decision of Bayer Materials Science Pvt. Ltd. ( ITA No. 7977/Mum/ 2010) for the proposition that once the assessee has chosen the comparable cases, then it became the duty of the TPO to find whether these cases are comparable. In the opinion of Ld. A.R. the FAR analysis is required to be compared. If the TPO is satisfied with the FAR comparison then the matter ends there at that stage. If not, the TPO can discard some of the ITA No.1690 &1622/Ahd/2010 &3201/Ahd/2011 Pino Bisazza Glass Pvt. Ltd. Vs. ACIT, C-5, Ahmedabad 2005-06 & 2007-08
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comparables but by giving reasons. If on investigation the TPO has detected that the assessee has done cherry picking, then he can ignore them. Then the TPO is to find out himself the comparable cases. But only after taking objections from the assessee, then include those selected comparables in the final list of comparables. According to the contentions, the voluntary selection of the comparable cases by the TPO is within his power but it is not his duty. However, if cases chosen by the assessee turn out to be incomparable, then the TPO will have to afford one more opportunity enabling the assessee to place the correct instances. In case of unsatisfactory data, the TPO has to undertake the exercise of selection of most suited comparable. None of the essential step was taken by the TPO/AO, Ld. A.R. has pleaded.
4.6 This plank of the argument has been duly considered by us. As far as the process out lined in the case of Bayer Materials Science Pvt. Ltd.( supra ) is concerned no one can have any dispute. But it's application should be in true spirit. In the given circumstances of this case the first onus of selection of comparables was discharged by the assessee. Thereafter it became the duty of the TPO to find whether those were in fact comparable in all respect or not. At that juncture the TPO had emptied the basket of the comparables of the assessee by mentioning that the first criteria of similarity of the product had failed in the said selection of the assessee. Rather in this case a subtle allegation of the TPO was that the assessee has done cherry picking. Once the selection of the assessee had been discarded then begins the duty part of the TPO. He is duty bound to select most close comparable instances available to him ITA No.1690 &1622/Ahd/2010 &3201/Ahd/2011 Pino Bisazza Glass Pvt. Ltd. Vs. ACIT, C-5, Ahmedabad 2005-06 & 2007-08
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being in the public domain. There can be an initial selection of 'industry segment'. In the present case there is a dispute on the said initial selection of the 'industry selection', that whether the segment could be 'glassware industry' as chosen by the assessee. On the other hand the contention of the Revenue Department is that in the presence of a more close, rather exact comparable is available, then there was no necessity to select broad industry segment. According to us if the broad segment has several other sub-segments then naturally the next filter is required to be applied. In this situation we do not find any fault in the approach of the TPO. First of all the assessee had itself in it's T.P. Repot had stated that there were no comparable available in this segment, therefore it is not correct to put blame on the TPO if he had made effort to locate a comparable of identical product. Rather the TPO had all the reasons to conclude that no further comparables could be provided by the assessee so as to arrive at the ALP. Hence we speak out our mind that this assertion of the assessee has no force that the TPO had incorrectly proceeded to select the said comparable. Therefore we hereby approve that, under the circumstances, BIPL is the most appropriate selection of comparable.
5. Ground No.5 is reproduced below:
"Use of data not in public domain"
5.1 The learned CIT(A) has erred in law by upholding the use of data not available in public domain to the Appellant while undertaking benchmarking analysis, by the AO for benchmarking the international transactions of the Appellant. 5.2 The learned CIT(A) has erred in law by not appreciating that the financial statements, director's report, annual report, etc. of a ITA No.1690 &1622/Ahd/2010 &3201/Ahd/2011 Pino Bisazza Glass Pvt. Ltd. Vs. ACIT, C-5, Ahmedabad 2005-06 & 2007-08
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private limited company is not available to general public but are available only to members of the company and not to general public."
5.1 Undisputedly, the TPO had placed reliance on Bisazza India Pvt. Ltd. (in short BIPL) for bench marking. Further there is no dispute that the said entity is in the identical business segment. Further it was also noted that the scale of operation was also similar. However, it was noted that BIPL is a Pvt. Ltd. Co. because of this reason the financial report of BIPL were not publicly available. However, vide a show cause the TPO had provided an opportunity to the assessee to inspect the P & L Account and the balance sheet of BIPL. During the assessment proceeding, the assessee had raised this legal objection that the comparable chosen for bench marking was incorrect because the data of the said company was not in public domain. It was submitted that the international transaction of the assessee company must not be bench marked against BIPL. However the director's report of BIPL for AY: 2005-06 was also provided to the assessee. The assessee had objected the selection of BIPL by assigning following reasons:
"1. Any data which is publicly not available cannot be used for purpose of benchmarking the international transaction.
2. Any data which was not available with the assessee at the time of carrying out benchmarking analysis cannot be used by the transfer pricing officer.
3. There is lack of transparency and qualitative information in private data.
4. It is also submitted while applying TNMM there has to be at least 4 to 5 comparable companies to have appropriate comparison and benchmarking.
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5. It is also submitted that Pino Bisazza is manufacturer of Glass Mosaic and does not undertake any activities relating to marketing, distribution or sales production."
5.2 The TPO had examined all those objections however he has placed reliance on OECD Guide Lines reproduced below:
"Tax administrators may have more information available to them from examinations of other taxpayers. However, as with any other method, it would be unfair to apply the transactional net margin method on the basis of such data unless the data can be disclosed (within the limits of the confidentiality requirements of tax laws) to the taxpayer so that there is an adequate opportunity for the taxpayer to defend its own position and to safeguard effective judicial control by the courts."
5.3 On the basis of the above quoted guidelines, it was held that any information can be gathered which is useful for determination of ALP. The only requirement as per section 92 CA (3) is that after considering all such evidences the same is required to be communicated to the tax payer. On the basis of those guidelines it was by suggested by OECD that a TPO can rely on sources of information other than provided by the assessee. A very old decision of CIT Vs. Khemchand ramdas 8 ITR 159 was cited wherein it was held that there was nothing in the Act which required the ITO to disclose to the assessee the material on which he proposed to proceed in his order, however, principle of natural justice required that ITO should draw the attention of the assessee on such material and give reasonable opportunity to defend the case. On the same lines other decisions of Seth Gurmukh Singh Vs. CIT 12 ITR 399 and Ganesh Das Kalu Ram 19 ITR 102 have also been referred.
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5.4 We have noted that this issue was discussed by the TPO at length. An objection was raised that the data of a private company lacks reliability, transparency and comparability. It was also contended that qualitative information of the transaction was not available to the public. However, the TPO was of the view that all those objections were nothing but general remarks and no specific objection in respect of the data available pertaining the BIPL was not mentioned. As per TPO since there was no other major player in glass mosaic sector in India therefore it was not possible to analyze the said industry except the selected one. According to TPO even the assessee had not provided the name of any other company in the manufacturing of glass mosaic in India. The TPO had mentioned that the search from data base like "Capitaline Plus" and "Prowess" have revealed that there were no comparable companies in the business of glass mosaic.
5.5. Even before learned CIT(A) this contention was raised however it was rejected mainly on the ground that as per Circular no.14 of 2001 issued by CBDT the availability of data is more important rather than availability of data in public domain. The TPO has shared the financial data of BIPL with the assessee, therefore, the compliance of the provisions of the Act were satisfied. Thus, according to ld. CIT(A) when there is no legislative provision which requires mandatory use of data in public domain for the purpose of bench marking then the issue raised by the assessee lacks legal sanctity.
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5.6. Before us learned A.R. has argued that the information which can be legally obtained and reasonably available to a tax payer must be used for bench marking. The information to which assessee had no access can not be used against the assessee. The assessee could not get access to those information therefore should not be used for comparability analysis. Ld. A.R has emphasized that section 92C(2) Rule 10C(2) prescribes that certain factors such as availability, coverage and reliability of data should be taken into account. Rather Rule 10D prescribes that a tax payer is required to substantiate the transaction on the basis of the material available with him. Ld. A.R. has commented that transfer price regulations itself uses the terms such as official publication which, in term, implies data in Public domain only. Had the intention of the legislature was to use the private data for the purpose of benchmarking, then it must have mentioned the same. Considering its importance and its far reaching impact in the transfer pricing regime the data publicly known is required to be used for bench marking. For this legal proposition reliance was placed on Philips Software Centre Private Limited Vs. CIT (119 TTJ 721) (Bangalore Tribunal) (2008) and Skoda Auto India Pvt. Ltd. Vs. ACIT (30S0T319/122 TTJ 699) (Pune Tribunal) (2009). Ld. AR has vehemently contested that a financial statement of a private limited company, its annual report, director report, etc. are made available to the share-holders of the company and those information are not made available to general public. Even, if such information is supplied to Registrar of Companies, the same is not made available to general public. He has objected that the data which is confidential should also not be downloaded from the ROC site. Ld. A.R. ITA No.1690 &1622/Ahd/2010 &3201/Ahd/2011 Pino Bisazza Glass Pvt. Ltd. Vs. ACIT, C-5, Ahmedabad 2005-06 & 2007-08
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has quoted section 220(1) of Companies Act which debars any person other than its member to have copy of P & L Account in case of a private company. Since the assessee could not have access to the financial result of BIPL being a private limited company therefore the same should not be used for benchmarking of an international transaction in the case of the assessee.
5.7. On the other hand, from the side of the Revenue, Ld. Representatives Mr. Anurag Sharma & Mr. D.P. Gupta, have informed that the data was obtained under Section 133(6) of IT Act. The TPO had adopted the correct legal recourse for collection of comparable data. For the purpose of determining the ALP of an international transaction the TPO is empowered to utilize information gathered by him. The power of the TPO under Section 133(6) has been upheld in the case of Maruti Suzuki India Ltd. (2010-TII-01-DEL-TP). Ld. D.R. has also referred OECD guidelines and argued that the guidelines do not prohibit use of such data, but the only condition is that the same should be provided to the assessee for rebuttal. A decision of Kodiak Network India Pvt. Ltd. 51 SOT 191 (Bang) is cited for the legal proposition that the TPO is not required to inform the assessee about the process used by him for issuing the notices under Section 133(6) of the IT Act. The TPO is empowered to utilize the provisions of section 123 of IT Act to obtain such information. In this context, OECD guidelines (para no.3.36) is referred, relevant portion is reproduced below:
"Tax administrators may have information available to them from examination of other taxpayers or from other sources of information that may not be disclosed to the taxpayer. However, it ITA No.1690 &1622/Ahd/2010 &3201/Ahd/2011 Pino Bisazza Glass Pvt. Ltd. Vs. ACIT, C-5, Ahmedabad 2005-06 & 2007-08
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would be unfair to apply a transfer pricing method on the basis of such data unless the tax administration was able, within the limits of its domestic confidentiality requirements, to disclose such data to the taxpayer so that there would be an adequate opportunity for the taxpayer to defend its own position and to safeguard effective judicial control by the courts."
5.8 Ld. D.R. has argued that the guidelines prescribed that certain documents is required to be maintained by the assessee in support of its claim of ALP. However, as per the provisions of transfer pricing regulation, the requirement is casted upon for maintenance of documentation but it is limited on the assessee, which do not absolve the power of the TPO. The TPO is free to consider other comparables. The D.R. has cited the provisions of 10D sub Rule 4 of IT Rules as well as Section 92C of the IT Act. The TPO is empowered to make his own research. The TPO can call for information from various entities, even without the knowledge of the assessee. After collecting all the information the TPO is duty bound to give all those material to the assessee which can be used against the assessee. Therefore, the power of the TPO to select comparables is not limited to the documentation kept by the assessee and it is well within his power to examine other sources as well. The requirement of maintenance of document, on the basis of information available to the tax payer, is at the time of establishment of transfer price, rather than at the time of justification of the same. According to learned D.R., assessee is trying to justify its transfer price by the use of independent external comparable rather than determine its transfer price. According to ld. D.R., this crucial difference has been ignored by the assessee. He has argued that in a case where 'transfer-
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price' is set before entering into the transaction, the only data that can be taken into account is the data available to the assessee i.e. the data which was available in public domain and therefore in this context the availability of data with the assessee assumes importance. On the contrary in a case where the transaction has already been entered into a price which is sought to be justified as ALP, then reliance on the "availability" of data with the assessee or the same being in public domain becomes misplaced. When the transactions has already been entered at a price which is sought to be justified then that price should be justifiable on the basis of any data (available from any source) and at any point of time (before or after the preparation of TP documentation by the assessee) with the conditions being that the data should be of the same period in which the transaction has been entered into and the data should be "comparable". The D.R. has again referred (para 3.36 of OECD guidelines) and argued that the tax administrators have more information available to them from examination of other tax payers. However, it is suggested that it would be unfair to apply TNMM on the basis of such data unless it is disclosed within the limits of confidentiality requirement, to the tax payer. A tax payer has a right to defend its own position. He has thus pleaded that there is no qualification that such material must be available in public domain. The D.R. has thereupon discussed OECD guidelines 2010 which prescribes different kinds of approaches for the selection of potential comparable. One of such approach is called "additive approach" in which a search is carried out and a list of third party is prepared which are believed to carry out potential comparable transactions. However, as per OECD guidelines such "additive approach"
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has no restriction or requirement that the selection of companies should be made only from public domain. As per the argument of ld. D.R. TPO has not erred in selecting only one comparable while applying TNMM as the most appropriate method. There is no mandate for selection of more than one comparable for the purpose TNMM, case law cited Haworth India Pvt. Ltd. 131 ITD 215 (Delhi).
5.9. On hearing the submission of both the sides at length, we have noted that the TPO had exercised his powers by invoking the provisions of Section 133(6) of IT Act for the purpose of collecting the information to determine the ALP. As far as this power is concerned, the same is enshrined under section 92CA(7) of IT Act, which prescribes, that, quote, " the Transfer Pricing Officer may for the purposes of determining the arm's length price under this section, exercise all or any of the powers specified in clauses (a) to (d) of sub-section (1) of section 131 or sub -section (6) of section 133 [or Section 133A]." However, question has been raised that the TPO should have regard to the fact that for the purpose of determining the ALP the information which is available to the assessee could be relied upon, on the reasoning that an assessee is not expected to take into account an information which is not in public domain. Peculiarity of this case is that the TPO had rejected the comparables as selected by the assessee out-rightly on the ground that the product which was transected had not matched with the product of the assessee. This was the start point for the TPO to search for other comparable instances. On one hand the assessee is required to substantiate its claim of ALP on the basis of material available with him, ITA No.1690 &1622/Ahd/2010 &3201/Ahd/2011 Pino Bisazza Glass Pvt. Ltd. Vs. ACIT, C-5, Ahmedabad 2005-06 & 2007-08
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refer Rule 10D of IT Act. But on the other hand Rule (supra) simultaneously give power to the AO to have independent search for the purpose of selection of comparable parties. From the side of the assessee it is thus vehemently argued that a data of a private limited company which is not in public domain should not be used against the assessee, because the same was not available to justify the ALP. Few case law have also been cited viz. Agility logistics Pvt. Ltd. (supra) and Philips soft ware Pvt. Ltd. (supra) and Skoda Auto India Pvt. Ltd. (supra), but all these cases are limited to the fact that a data which was not available in public domain was used as comparables. However, in these decisions the next step was not under consideration that in case a data of a private limited company has been collected by the TPO on search, then whether the same can be used for the purpose of determining the ALP, if that data of a private limited company is duly communicated to the assessee. In few other cases which are relied upon by ld. D.R., namely, Maruti Suzuki India Ltd. (supra) and Kodak Networks India Pvt. Ltd. (supra), it is held that the information collected after issuing notices under Section 136(6) is required to be communicated to the assessee and the AO is under obligation to furnish the entire information to the assessee. In the present case, since the undisputed fact is that the assessee had in fact been given an opportunity to contradict the material gathered by the TPO therefore we are of the considered opinion that there was no infringement of the natural justice.
5.10 Both the sides have referred OECD guidelines (para 3.36). On careful reading we have noted that the tax administrator has more ITA No.1690 &1622/Ahd/2010 &3201/Ahd/2011 Pino Bisazza Glass Pvt. Ltd. Vs. ACIT, C-5, Ahmedabad 2005-06 & 2007-08
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information available to them. But the requirement is that it would be unfair to apply those information against the assessee, unless that data/information is disclosed to the assessee so that the assessee can safeguard its legal interest. Therefore the law has few segments. As per one segment a duty has been casted upon the assessee to keep and maintain the documents to justify the ALP. The other segment is that the TPO can, on his own, make search of comparable cases. This power is enshrined under the Act but with a rider that the information so gathered should be handed over to the assessee to grant him proper opportunity to present his objections, if any. We, therefore, conclude that the assessee has first entered into the international transaction and thereupon to justify the ALP he has cited few comparables. But the law is that the assessee is required to establish that the international transaction was the ALP transaction. Only to compute the ALP it is expected to compare the data's with other identical nature of companies, rather than collect the information to defend the ALP in respect of the said international transaction which had already been completed. At this stage , we may like to precisely make it clear that this observation may not be misunderstood that right now we have opined that the assessee's transaction was not at ALP. Sooner this aspect shall be discussed herein below. At present, according to us, the data of a private limited company as selected by the TPO once communicated to the assessee and the assessee had been granted opportunity to refute the same, then the requirement of the law has been fulfilled by the TPO, therefore, there was no infringement of law. Considering those facts and the law laid ITA No.1690 &1622/Ahd/2010 &3201/Ahd/2011 Pino Bisazza Glass Pvt. Ltd. Vs. ACIT, C-5, Ahmedabad 2005-06 & 2007-08
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down as discussed herein above, we hereby find no force in this ground of the assessee. Hence dismiss the same.
6. Ground No. 6 is reproduced below:
"The learned CIT(A) has erred in law and on facts in upholding the AO's action of selecting only one company i.e. Bisazza India Private Limited ("BIPL") as a single independent comparable company, the data of which is not available in the public domain, in application of Transactional Net Margin Method ("TNMM") in case of the Appellant.
Thus, the learned CIT(A) erred in upholding the AO's arbitrary approach in selection of comparables involving cherry picking of comparables."
6.1 The undisputed fact is that the TPO had selected BIPL as an independent comparable company and applied TNMM method. Therefore, the objection of the assessee is that the said action of the AO was an arbitrary approach in selection of comparables. As per the argument of learned A.R., TNMM requires broader comparability. The TPO was required to first carry out the FAR analysis before concluding that BIPL was the comparable company for bench marking. According to ld. AR no such methodology was followed by the TPO. He argued that the TPO had adopted the method of "cherry picking". The TPO should have taken into account a range of results. In a number of decisions a view has been conveyed that a single company cannot be considered as a good comparable company for the purpose of bench marking, an argument has been raised before us.
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6.2 There was a discussion of a decision of Haworth India Pvt. Ltd. 131 ITT 215 for the legal proposition that a single comparable company can be taken for benchmarking. On this the learned AR has drawn a distinction that in the said cited decision the single comparable as selected by the TPO was factually available in public domain. However, in the present case the case selected by the TPO was not in public domain. He has concluded that since the TPO had selected only one comparable therefore the said basis is required to be rejected.
6.3 From the side of the Revenue, learned DRs have contended that there is no such condition in law which mandates selection of more than one comparable for the purpose of TNMM application. Learned DR has again placed reliance on Haworth India Pvt. Ltd. 131 ITT 215 for the legal proposition that there was no requirement for fresh search to be taken by the TPO because the comparable selected was identical with the business activity of the assessee. In this precedent as well it was held that merely due to the existence of a single comparison, there should not be a reason to carry out a fresh search on that ground. The principle is that in case the entity is comparable to a large extent to the tested party, there is no need to consider a large number of entities for the purpose of comparability. He has pleaded that the single comparable as considered by the TPO was very much similar to the assessee, therefore only one comparable could be considered for analysis. According to learned DR there was no fault on the part of the TPO.
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6.4 We have heard both the sides and also examined the circumstances of the case. At the outset, we may like to point out that in the case of Vedaris Technology Pvt. Ltd. 44 Sot 316 (Delhi) and in the case Patro System TSI India Ltd. (supra), it is held that if only one comparable is left then the selection is as per law. As discussed hereinabove facts of the case have revealed that the comparables which were selected by the assessee were not identical in respect of the product manufactured. The TPO had found that only one company happened to be manufacturing the same article i.e. Glass Mosaic. Moreover, the comparables which were selected by the assessee did not have the same line of manufacturing activity. We are also not convinced that merely on the ground that the TPO could have laid hand on one comparable than he was expected to do more research. As held in number of decisions an ALP can be computed even on the basis of one comparable. For this legal proposition, reliance is correctly placed on Haworth India Pvt. Ltd. (supra). Considering the few decisions as cited before us from the side of the Revenue, we hereby hold that the selection of single comparable was not in defiance of any law. Rather the TPO is empowered to apply TNMM even if he has laid hand on one comparable instance. This part of the action of the TPO/AO is hereby confirmed.
7. Ground No.7 is reproduced below:
"7. Erroneous selection of BIPL as a comparable company 7.1 The learned CIT(A) has erred in upholding AO's contention that the product comparability is more important than functional comparability when comparison is made based on margins and method adopted for benchmarking is TNMM.
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7.2 The learned CIT(A) has erred in law and on facts in disregarding difference in functions, asset and risks between the Appellant and BIPL as BIPL undertakes selling & marketing activities.
7.3 The learned CIT(A) also erred in law and on facts in disregarding certain facts in case of BIPL such: substantial controlled transactions, auditors qualification with respect to transfer pricing policy, absence of other qualitative information."
7.1 In these grounds, the assessee has raised a basic contention that the BIPL was also having "controlled transactions" hence should not have been chosen as a comparable. For the purpose of comparability, learned AR has argued that, as per the definition of uncontrolled transaction in the terms of Rule 10A(a) the comparability of an international transaction ought to have been done with an uncontrolled transaction. The comparison could have been judged with reference to function performed, risk involved, etc. As per the definition of "Arms Length Price", means a price applied in transaction between the assessee, other than associated enterprises, which should be an uncontrolled transaction. Rather learned AR has cited few sections of this chapter wherein the Act has insisted to select an uncontrolled transaction. According to the argument of learned AR, a comparison could have been done only in respect of uncontrolled transaction. He has pleaded that it would be noted that any company which has entered into an international transaction with its Associate Enterprise cannot be considered as an appropriate comparable for the purpose of transfer pricing analysis as it would have entered into controlled transaction and not uncontrolled transaction. In other words, a company having any related party ITA No.1690 &1622/Ahd/2010 &3201/Ahd/2011 Pino Bisazza Glass Pvt. Ltd. Vs. ACIT, C-5, Ahmedabad 2005-06 & 2007-08
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transaction should not be considered a comparable company. At this place it is worth to mention that learned CIT(A) has commented that BIPL having entered into a controlled transaction was only a probability and that the allegation was not confirmed. Learned AR has also cited OECD guideline (para 2.78 ) for the proposition that a company having a related party transaction must not be used as a comparable company. Reliance has been placed on Philips Software Centre Private Limited V. CIT (119 TTJ 721) (Bangalore Tribunal) (2008). In this case, it was held that a company having transaction with related party should not be taken as comparable. Even in the case of Mentor Graphics (Noida) Private Limited Vs. DCIT (109 ITD 101/112 TTJ 408 (Delhi Tribunal) (2007), it is held that the taking of control transaction as comparable is against the very basics of transfer pricing guidelines.
7.2 Learned AR has also stated that while passing the TP order for AY 2007-08 the TPO had rejected BIPL as a comparable company. The TPO had held that the BIPL was having controlled transactions, therefore could not be taken as a comparable company. Further for this legal proposition that a controlled transaction must not be taken as a comparable company, learned AR has also mentioned that in AY 2008- 09 the TPO had rejected one comparable, namely, Saint Gobain Sekruit India Ltd. on the ground of controlled transactions was more than 25%. It is therefore submitted that for the year under consideration the TPO has grossly erred in selecting such comparable company which was having controlled transaction.
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7.3 The next plank of argument is that in a situation when no external comparable is available then the TPO could have adopted "internal comparables". If the 'internal comparable' has direct, as also close relationship to the transaction, than it could have been preferred. The AR has therefore explained that the assessee had exported products to AE i.e, Trand Group and it had also made some local sales in the local market to the Poddar Group of the same product. The total export sales to the Associated enterprise i.e. Trand Group was Rs. 21,63,60,580/- and in the local market it was Rs.4,29,67,496/-. Learned AR has pointed out that the assessee had not considered sales to Poddar Group for the purpose of benchmarking. The reason to avoid was that the Poddar Group held 33% in the assessee company and hence the Poddar Group is also an Associate Enterprise. He has pleaded that if the condition of controlled transaction is ignored then sale to Poddar Group could have provided better comparability.
7.4 Learned AR has also quoted that the assessee had standard price list at which the goods were sold to Trand Group, as well as to Poddar Group. Since, the goods sold to Trand Group were large in quantity and significant amount was involved therefore the appellant had allowed 4.55% discount to Trand Group, whereas no such discount was allowed to Poddar Group. In this regard, we have been informed that as per the calculation the Operating Margin in respect of export sales to Trand Group was 7.47% whereas Operating Margin in respect of domestic sales to Poddar Group was 6.20%. He has therefore vehemently pleaded that Operating Margin earned by the assessee for export sales was higher than ITA No.1690 &1622/Ahd/2010 &3201/Ahd/2011 Pino Bisazza Glass Pvt. Ltd. Vs. ACIT, C-5, Ahmedabad 2005-06 & 2007-08
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the domestic sales. He has concluded that the international transaction was therefore at ALP.
7.5 An another argument has also been raised that the AO had given more importance to "product comparability" instead of giving importance "functional comparability". It was expected from the AO to obey OECD guidelines by giving due regard to FAR analysis. He has pleaded that in order to treat any company as comparable, there Functions, Assets and Risks (FAR) should be alike and to be benchmarked. In this regard an another point has also been raised by learned AR that the AO had not considered FAR of BIPL. The BIPL is engaged in manufacturing, distribution as also marketing activity, whereas the assessee company is engaged only in manufacturing activity. The assessee company had not undertaken any function relating to distribution and marketing. Due to this reason, the BIPL had better profit margins due to the activities of distribution and marketing. Since, the FAR analysis was not considered by the TPO, therefore, the benchmarking was incorrect and unreliable. In the case of the assessee sales are made to only two parties. Due to this reason, the assessee did not have any bad-debt. The assessee was not facing the problem of collection from the customers. Since, the BIPL had undertaken the marketing; therefore, it had higher risk and side by side higher profit. Certain other comparisons have also been made by learned AR mainly to demonstrate that the BIPL was wrongly selected by the TPO. Learned AR has compared the consumption of raw material between the assessee and the BIPL and according to him the proportion of soda ash and zinc ITA No.1690 &1622/Ahd/2010 &3201/Ahd/2011 Pino Bisazza Glass Pvt. Ltd. Vs. ACIT, C-5, Ahmedabad 2005-06 & 2007-08
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oxide were used in different proportions. On the basis of these disqualifications, according A.R., the BIPL was wrongly compared.
7.6 From the side of the Revenue Ld. DR has argued that there are various judgments which subscribe a thought that it is very difficult and impossible to find an exactly comparable entity, therefore, it is held that certain criterion is required to be relaxed. Merely by stating that BIPL had controlled transaction, should not discarded the comparable, when specially all the vital features have been matched. The assessee has not demonstrated that by virtue of controlled transaction how the TNMM method is affected.
7.7 About the suggestion of Internal TNMM consideration, Ld. DR has pleaded that an export transaction can not be compared with the local sales.
7.8 This ground and the A.R's arguments have three limbs. The first limb of argument is that since the BIPL has "controlled transaction"
therefore it can not be selected for comparison. Indeed one of the fundamental of determining ALP is that the transaction ought to be uncontrolled transaction. In this connection the case laws cited namely Philips Software Centre Pvt. Ltd. 119 TTJ 721 (Bang. Trib.), Mentor Graphic 109 ITD 101 (Del Trib) are very relevant wherein it is opined that the company having transaction with any related party should not be taken as comparable. It was also held that taking controlled transaction as comparable is against the very basics of Transfer Pricing guidelines. On ITA No.1690 &1622/Ahd/2010 &3201/Ahd/2011 Pino Bisazza Glass Pvt. Ltd. Vs. ACIT, C-5, Ahmedabad 2005-06 & 2007-08
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the same lines, now we have to examine as to why a controlled transaction should not be considered for the purpose of comparability analysis in TNMM. In TNMM method the ALP of an international transaction is established by comparing the net margin with a comparable uncontrolled transaction. The assumption is that in case of controlled transaction the net margin earned can be a manipulated margin of profit. As a result, the controlled transaction is not taken into account for the comparability analysis. But after considering the difficulty in searching such an ideal situation and due to practical hindrances this requirement is now diluted. It is considered that if certain amounts of controlled transaction are taken into account in the comparability analysis then that may not have significant effect on the margin of the comparable. So a formula has been evolved which is now the accepted one. A filter is required to be applied in respect of the related party transaction. After ignoring the amount of controlled transaction the ALP is advised to be computed. Therefore we are of the view that considering the over all discussion made in this order hereinabove it is not practicable to outright reject BIPL. Even in the case of Bayer Materials Science Pvt. Ltd. (supra) it was held that TPO can use controlled transactions while benchmarking the international transaction of the assessee. In that precedent it is opined that where it is admitted between the taxpayer and the tax collector that there is no availability of comparable uncontrolled transaction due to the nature of transaction, in such a situation, a transaction between two A.Es., though technically called 'controlled transaction', would partake the character of 'uncontrolled transaction' for the purpose of determining ALP. Additionally, we have also noted that ITA No.1690 &1622/Ahd/2010 &3201/Ahd/2011 Pino Bisazza Glass Pvt. Ltd. Vs. ACIT, C-5, Ahmedabad 2005-06 & 2007-08
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Ld. CIT(A) remained ambiguous on this aspect by saying that BIPL having controlled transaction was a probability so he did not confirmed. Hence, to reach at a logical conclusion an uncertainty is to be removed and certainty is to be established. Which means the exact effect of such transaction is yet to be examined. Therefore we are of the view that a filter is required to be applied in respect of the controlled transaction and then the profitability is to be computed. The A.O. is therefore directed to first ascertain the magnitude of the controlled transaction and then compute it's effect on the profit margin. For guidance, OECD Guidelines (para 2.78) is helpful, where it is suggested that an appropriate level of segmentation of taxpayer's financial data is needed when testing the net profit it earns from a controlled transaction. Then costs and revenue that are related to the controlled transaction are to be separated, where they materially affect comparability with uncontrolled transaction. Further para 2.79 of OECD says that when net profit indicators of an independent enterprise are used, the profits attributable to the transactions of the independent enterprise must not be distorted by controlled transactions of that enterprise hence to be excluded to the extent if needed. After requisite adjustments the A.O. can arrive at a figure of ALP. We therefore take a decision that for this purpose the matter is required to be re-examined by the TPO/ AO, so direct accordingly.
7.9 Next, the second limb of argument is in respect of application of 'Internal TNMM'. Some times it is find that internal comparables may have more direct as also closer relationship to the transaction under consideration than external comparables. First similarity is the ITA No.1690 &1622/Ahd/2010 &3201/Ahd/2011 Pino Bisazza Glass Pvt. Ltd. Vs. ACIT, C-5, Ahmedabad 2005-06 & 2007-08
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resemblance of the product. Likeness of the product exported with the product sold in domestic market can not be questioned. Even OECD guide lines have suggested an ideal situation with reference to the profit indicator that the same taxpayer earns in comparable uncontrolled transaction. The only point for observation in such consideration is that the impact of the geographical source is to be taken into account. A general rule on the determination of ALP is that the prices may vary across different markets even for transaction involving the product. Therefore to achieve comparability it requires that the market in which the independent and A.E. operate are comparable. An another possibility is that to achieve the comparability the domestic market sales can be compared with the export market sales of that very assessee. By this procedure at least one thing is assured that the products manufacture and sold is alike. Then the economic factors, management factor, finance involvement etc. are also indistinguishable. These factors being dove tailed, either cross-border or domestic sales, hence impossible to tear apart therefore uniformly applies on both type of transaction of the same assessee. We, therefore, direct the AO that "internal comparable" can be considered but after certain adjustments. We have been informed that the Operating Margin in respect of transaction with "Trand Group" was 7.47%, i.e., export sales and the Operating Margin in respect of transaction with Poddar Group was 6.20% i.e. in respect of domestic sales. In our opinion, this is an important aspect. Therefore, we are of the considered opinion that the AO has to examine the calculation of Operating Margin and verify the correctness of the same. After applying ITA No.1690 &1622/Ahd/2010 &3201/Ahd/2011 Pino Bisazza Glass Pvt. Ltd. Vs. ACIT, C-5, Ahmedabad 2005-06 & 2007-08
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the filters as suggested hereinabove, if the result is in favour of the assessee then the international transaction can be held as at ALP.
7.10 The third limb of argument is in respect of the FAR analysis of BIPL vis-à-vis the FAR analysis of the assessee. A fundamental distinction was referred by learned AR that BIPL is not only engaged in the manufacturing activity but also undertaken the distribution with marketing of the product. On the other hand, learned AR has informed that the assessee company had neither taken the distribution responsibility nor engaged in the marketing of the product. The assessee is engaged only in manufacturing activity. A businessman performing marketing and sales promotion naturally expects higher returns. Apart from this, an another major factor in this regard has also been pointed out by learned AR that the assessee had sold its product to only two parties. There was no risk of recovery in the case of the assessee. On the other hand, the BIPL being controlling the marketing has the credit risk. In the case of Egain Communication Pvt. Ltd. 118 TTJ 354 (Pune) and in the case of Philips Softwares 119 TTJ 721 (Banglore) a ratio has been laid down that the functional comparability is a must to arrive at ALP. Therefore, we are of the view that the FAR analysis of BIPL is to be compared with FAR analysis of the assessee and the factors which are not matching are to be discarded and rest of the factors are required to be matched to a nearest possible figure. It is not out of place to mention here that once the product comparability is accepted therefore the rest of the analysis can be recalculated as per the guidelines discussed hereinabove. In the light of the discussion and after due consideration of all the three ITA No.1690 &1622/Ahd/2010 &3201/Ahd/2011 Pino Bisazza Glass Pvt. Ltd. Vs. ACIT, C-5, Ahmedabad 2005-06 & 2007-08
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planks of the argument we hereby hold that ground no.7 of the assessee requires re-adjudication on the part of the AO, therefore, this ground may be treated as allowed for statistical purpose.
8. Ground no.8, 9 and 10 are reproduced below:
"8. Risk Adjustment The learned CIT(A) erred in not allowing risk adjustment for differences in the risk profile of the Appellant vis-à-vis comparable companies which assumes significant risk with respect to its business operations.
9. Transfer pricing addition results into discrimination to the Appellant The learned CIT(A) has failed to appreciate that the addition with respect to Transfer Pricing results into discrimination to the appellant based on ownership criterion in view of Article 25 of Double Tax Avoidance Agreement between India & Italy. As per the said Article, the appellant cannot be subject to taxation which is more burdensome based on discrimination on ownership criterion and accordingly no transfer pricing adjustment can be made with respect to its international transaction with its Associated Enterprises as the same would tantamount to be discriminating.
10. Benefit of -/+ 5% range The learned CIT(A) has erred in law and on facts by not allowing variation of 5% from the arithmetic mean while determining arm's length price as per Proviso to Section 92C(2) of the Act, though claimed by the Appellant."
8.1 In respect of these three grounds, we are of the view that in foregoing paragraphs while dealing ground no.7 we have expressed that the adjustments are required to be made in respect of credit risk and marketing activities. After those adjustments, the AO can arrive at ALP ITA No.1690 &1622/Ahd/2010 &3201/Ahd/2011 Pino Bisazza Glass Pvt. Ltd. Vs. ACIT, C-5, Ahmedabad 2005-06 & 2007-08
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by fairly comparing the economic results of BIPL. We, therefore, hold that once the matter is going back for the limited purpose to AO therefore these grounds at present are not required any adjudication. At best these grounds may be treated as restored back to the file of the AO for re- adjudication along with ground no.7.
b). ITA No.1622/Ahd/2010 (A.Y. 2005-06) (Revenue's Appeal)
9. Revenue has raised the following two main grounds:
"1. The Ld. Commissioner of Income Tax (A)-XI, Ahmedabad has erred in law and on facts in directing to determine Arms Length Price (ALP) by excluding abnormal cost of Rs.62.08 lacs while working out operating profit.
2. The Ld. Commissioner of Income Tax(A)-XI, Ahmedabad has erred in law and on facts in directing to determine the Arms Length Price by taking value of international transaction of sale of glass mosaic of at Rs.21,63,60,580/- instead of adjusted sale of Rs.25,93,28,049/- determined by the Transfer Pricing Officer (TPO).
9.1 In respect of ground no.1, learned CIT(A) has taken into account that the assessee had started production of new range of Glass Mosaic. It was contended that the trial batches were rejected due to certain defects. Substantial cost was incurred by the assessee. Learned CIT(A) has considered that argument and thereupon arrived at the conclusion that such expenditure was not normal cost and therefore required to be excluded while working out the operating profit. He has directed the AO to exclude the cost of Rs.62.08 lacs while working out the operating profit. Having heard the submissions of both the sides, we are of the view that this aspect can also be examined along with the other factors as ITA No.1690 &1622/Ahd/2010 &3201/Ahd/2011 Pino Bisazza Glass Pvt. Ltd. Vs. ACIT, C-5, Ahmedabad 2005-06 & 2007-08
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demarcated while dealing ground no.7 (supra). Resultantly, we hereby hold that re-adjudication was required by the AO. Hence this ground of the revenue may be treated as allowed for statistical purpose.
9.2 In respect of ground no.2 of the Revenue, the assessee has informed that the total sales for the year was Rs.25,93,28,049/-. However, sale of international transaction was Rs.21,63,60,580/-. Learned CIT(A) has directed to computed transfer pricing adjustment only in respect of the value of international transaction. In the above paragraphs, we have already made a detailed discussion and aware about this aspect therefore we find no fallacy in the direction of the learned CIT(A). In the result, under the totality and the facts and circumstances of the case we find no force in this ground of the Revenue. Hence dismiss.
10. In the result, these cross appeals of the assessee and the revenue both are partly allowed for statistical purpose.
B). ITA No. 3201/Ahd/2011 (for A.Y. 2007-08)
11. This appeal of the assessee is emanating from few orders as listed below:
1. Order under Section 92CA(3) dated 19.10.2010 passed by TPO (ACIT, Ahmedabad).
2. Order of DRP under Section 144C(5) dated 27.9.2011.
3. Assessment order under Section 143(3) r.w.s. 144C dated 17.10.2011.
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12. This is an appeal filed by the assessee directly against an assessment order under Section 143(3) read with section 144C of IT Act dated 17.10.2011. Several grounds have been raised which are adjudicated hereinbelow:
"Ground No. 1. The order passed by the learned AO is erroneous and contrary to the provisions of law, facts and circumstances of the case and therefore requires to be modified.
Ground No. 2. The AO and / or the Transfer Pricing Officer (TPO) erred in law and on facts in making and the Dispute Resolution Panel (DRP) erred in law and on facts in upholding adjustment of Rs.7,46,67,165/- in respect of the international transactions of the Appellant u/s. 92CA(3) read with 92C(3) of the Income Tax Act, 1961 ("the Act").
Ground No.3. The Hon'ble DRP erred in law and on facts in passing laconic and not speaking directions under section 144C of the Act of the Act leaving certain objections of the appellant uncommented and hence the directions need to be quashed."
13. The assessee had filed the return declaring income of Rs.2,14,03,585/-. It was noted that the assessee had entered into an International Transaction with its Associate Enterprise. It was also noted that the value of the International Transaction had exceeded Rs.15,00,00,000/-. Due to the said reason, the matter was referred to the TPO. A reference under section 92CA (1) was made for A.Y. 2007-08 for the computation of arm's length price in relation to International Transaction. It was noted that the assessee is engaged in the manufacturing of MOSAIC glass. The manufacturing unit is situated at Kadi, Gujarat. The assessee is a subsidiary of Trand group SPA, Italy. It ITA No.1690 &1622/Ahd/2010 &3201/Ahd/2011 Pino Bisazza Glass Pvt. Ltd. Vs. ACIT, C-5, Ahmedabad 2005-06 & 2007-08
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has also been noted that the said company had other five AEs in Malayasia, Hongkong and USA. As far as the assessee is concerned it was found that the international transaction with its AE was as under:
"International Transactions- During the year, Pino Bisazza has entered into following international transactions.
Description of transaction Amount (Rs.)
Purchase of raw material, stores 67,67,963
& spares
Sale of glass mosaics 25,00,28,577
13.1 The analysis of the aforementioned international transaction was analyzed in the light of the following points:-
"(a) Selection of Tested Party: In the Transfer Pricing Documentation submitted by the assessee, the assessee has selected Pino Bisazza (Indian company) as tested party, keeping in view complexity of functions performed, availability of comparable data and requiring minimum adjustment. The same is accepted as tested party for transfer pricing audit.
(b) Selection of Most Appropriate Method : On the basis of functions performed, assets deployed and risks assumed by the assessee, Transaction Net Margin method (TNMM) has been chosen by the assessee as the most appropriate method and the same is accepted.
(c) Selection of Profit Level Indicator (PLI): Since the transaction under scrutiny is the sale to the AEs, Operating Profit Margin on operating cost is taken as the Profit Level Indicator in the case of the assessee.
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(d) Selection of Comparables: The assessee is engaged in manufacturing and export of glass mosaic. Given the nature of the business of Pino Bisazza, following 10 comparables have been selected by the assessee."
14. The assessee had informed that there was no major player in the glass mosaic sector in India. Therefore, the assessee had compared itself with companies having glass products in its portfolio. The submission of the assessee was that ten companies have been short listed which were manufacturing glass or glassware product. The TPO wanted to compare the production therefore the activities of those companies were obtained from "prowess-database" as follows:
Company Name Economic Product (1) Product (2)
Activity1
Bottles Glass Bottles
Excel Glasses Ltd.
Goa Glass Firbre Glass fibres Glass Fibres Scrap
Gujarat Borosil Glass & glass Miscellaneous Sheet Glass On 2
Ltd. wares Mm Basis
Haldyn Glass Bottles Glass Bottles Others
GUJARAT Ltd.
La Opala R G Ltd. Kitchen glass Opal Glass Wind Mill
wares
Saint-Gobain Toughened & Flat Toughened Laminated Curved
Sekurit India Ltd. laminated (safety) Glasses windshields
glass
Sejal Architectural Toughened & Annealine Lehrs Bottle Making
Glass Ltd. laminated (safety) Machines
glass wares
U P Twiga Fiber Glass & glass Glass Fibre Scrap
glass Ltd. wares
Borosil Glass Scientific Consumer Range Financial Charges
Works Ltd. Apparatus & Lab Glass
Glass
14.1 On the basis of the above comparison, it was observed by the TPO that the companies selected by the assessee were manufacturing glass ITA No.1690 &1622/Ahd/2010 &3201/Ahd/2011 Pino Bisazza Glass Pvt. Ltd. Vs. ACIT, C-5, Ahmedabad 2005-06 & 2007-08
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bottle, kitchen glasswares, insulated glass, laminated glass, etc. Therefore, according to TPO, those products were completely different from the "glass mosaic" manufactured by the assessee. It was noted by the TPO that the glass mosaic is a luxury product. Because of its aesthetic characteristic the glass mosaic enjoys a premium in the market which is not available to regular glass product. The regular glass product like glass bottles, are the products of mass consumption. The AO has also examined the consumption of raw material and have noticed that the use of raw material, i.e., silka was only 2.9% of the total raw material. It was also commented that the assessee has used costly raw material to manufacture the glass mosaic. On that basis, the TPO had concluded that the other glass industry cannot be compared with the assessee company.
14.2 Thereafter, the TPO had also made out a case that the assessee company had charged very less margin on cost in respect of transaction with AE, than the transaction with non AE. The product wise comparison is summarized as under:
Sale to Non AE Sale to AE
Product -V-A
GP/Cost 129.57% GP/Cost 3.67%
Product-V-B
GP/Cost 228.47% GP/Cost 18.94%
Product - Brilliant
GP/Cost 354.34% GP/Cost 3.82%
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Pino Bisazza Glass Pvt. Ltd. Vs. ACIT, C-5, Ahmedabad 2005-06 & 2007-08
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14.3 On the basis of the above comparison, the allegation of the TPO was that the assessee had charged less from its Associated Enterprise than the third party.
14.4 The TPO issued notices under Section 133(6)(2) (i) Italia Glass Pvt. Ltd, (ii) Karishma Mosaic Glass Pvt. Ltd. Those companies have submitted their audited account with the report. As far as the comparison with M/s. Karishma Mosaic Glass Pvt. Ltd. was concerned the profit shown was very high therefore it was not compared because of abnormal profit. The assessee was issued show cause notice, asking the assessee to explain that the manufacturing of glass mosaic is different from the manufacturing of glass products therefore it was not ideal to compare those companies. The TPO has suggested that the International Transaction entered by the assessee was required to be "Bench Marked"
against M/s. Italia Glass Pvt. Ltd. According to the TPO, the said earmarked company was exactly in the same business segment. It was communicated by the TPO that Italia Glass Pvt. Ltd. being a private limited company therefore the financial reports of the said company were not publicly available. The assessee was granted opportunity to inspect the profit & loss account and the balance sheet of Italia Glass Pvt. Ltd.
14.5 In compliance the assessee had submitted that the assessee company was incorporated in the year 2000. The company is manufacturing glass mosaic which is a highly priced glass product therefore it has lesser market in India, else compared to the oversees ITA No.1690 &1622/Ahd/2010 &3201/Ahd/2011 Pino Bisazza Glass Pvt. Ltd. Vs. ACIT, C-5, Ahmedabad 2005-06 & 2007-08
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market. The majority of the glass mosaic manufactured was supplied to its Associate Enterprise viz. Trand Group SPA, Italy, the company registered in Italy. It was specified that the said product was not exported to any other party outside India. The finished goods exported was of Rs.25,00,28,577/-. It was clarified that although the glass mosaic product is commonly known as tiles but it would not be appropriate to compare the glass mosaic with tile industry. The Tile Industry is a ceramic product, altogether a different product. Then it was argued that the glass- ware industry would be more akin to the product of the assessee. It was argued that due to the said reason as also coupled with the fact that no internal / external uncontrolled transaction was available, the assessee had selected transaction net margin method (TNMM) as the "most appropriate method" for the purpose of bench marking its transaction. Certain common objections have also been raised, such as that the change in the ALP was ultravires on the part of the TPO and that the price charged in an international transaction has not been determined as per the prescribed rules and that the documents relating to the said international transaction was correctly maintained by the assessee. It was also contested that the TPO had merely stated that the glass and mosaic glass were different in technical and aesthetic characteristic therefore could not be compared. It was contested that the TPO was required to demonstrate that the clauses of Section 92C(3) were attracted before proceeding to re-compute arm's length price. For this legal proposition reliance was placed on following three decision:-
"(a) Philips Software Centre Private Limited Vs. CIT 119 TTJ 721 (Bang) ITA No.1690 &1622/Ahd/2010 &3201/Ahd/2011 Pino Bisazza Glass Pvt. Ltd. Vs. ACIT, C-5, Ahmedabad 2005-06 & 2007-08
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(b) Mentor Graphics Noida P. Ltd. V. DCIT 109 ITD 101/ 112 TTJ 408 (Del)
(c) ACIT vs. MSS India Pvt. Ltd. (2009-TIOL-416-ITAT-PUNE)"
14.6 According to the assessee, the comparables selected for bench marking the International Transaction were best comparable available and the bench marking was carried out in accordance with TP Regulation. So the assessee had objected that the use of any data which is not available to the public must not be used for bench marking. According to assessee a secret comparable is not be used to determine the ALP of an international transaction. Certain other points have also been raised such as that the Italia Glass Pvt. Ltd. (in short IGPL) had most of its transaction with related parties. It was informed that since substantial transactions were "control transactions" therefore such transaction ought not to be considered for the purpose of bench marking. Another feature has also been pointed that on one hand the assessee is engaged in manufacturing activities, whereas IGPL is engaged in trading activities. Certain other points of distinction have also been narrated. The TPO had placed reliance on CIT Vs. Khem Chand Ramdas 8 ITR 159 for the legal proposition that there was nothing in the Act which required the ITO to disclose the material on which the assessment was proceeded. The principle of natural justice requires that the AO should draw the attention of the assessee to such material. A decision Gurumukh Singh 12 ITR 393 was also cited that while relying on private sources of information, the AO might not bound to disclose such source but the result of the inquiries are required to be communicated to the assessee. The computation of the PLI of the assessee was made as under:
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(Amount in Crs.)
Net takes cherry in stock 31.44
1.10
32.54
Operating Cost 30.23
Operating Profit 2.31
OP/Cost 7.64%
14.7 The PLI of the IGPL was computed as under :
Amount in crores:
Net sales 6.79
Operating Cost 5.13
Operating Profit 1.66
OP/Cost 32.36%
14.8 On the basis of the above difference the transfer pricing adjustment was made by the AO as under:
Transfer Pricing Adjustment Net Sales 31,44,28,612 Change in Stock 1,09,82,275 Operating Income 32,54,10,887 Operating Cost 30,22,65,074 Operating Profit (PBIT) 2,31,45,813 Operating Profit (PBIT) at ALP @ 9,78,12,978 32.36% Difference in PBIT 7,46,67,165 Sales at book value 25,00,28,577 ITA No.1690 &1622/Ahd/2010 &3201/Ahd/2011 Pino Bisazza Glass Pvt. Ltd. Vs. ACIT, C-5, Ahmedabad 2005-06 & 2007-08
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Sales at ALP 32,46,95,742
Transfer Pricing Adjustment 7,46,67,165
14.9 The conclusion was that the ALP of the sales made to AE
should be Rs.32,46,95,742/- as compared to the transaction value as per books of Rs.25,00,28,577/- the total upward adjustment was thus made of Rs.7,46,67,165/-. This is the cause of dispute in this appeal.
14.10. Although the recommendation of the Dispute Resolution Panel (DRP), Ahmedabad dated 27.9.2011 are not subject to litigation before us, but for the sake of completeness as also to examine the facts of the case we have perused the directions of DRP. It was noted that the assessee is manufacturing glass mosaic at Kardi, Gujarat. It was also noted that the assessee is a subsidiary company Trand Group Spa, Italy.
Sales of glass mosaics were made to the said company. The assessee had selected itself as a tested party and applied TNMM method as the most appropriate method. The assessee had furnished certain comparables but those were in respect of products such as glass bottles, glass fibres, insulated glass, etc. On the other hand, the assessee manufactured a luxury product, i.e. Glass mosaic. Because of the aesthetic characteristic the glass mosaic was not compared with the normal glass products. The TPO had compared the product of the assessee with M/s. Italia Glass Pvt. Ltd. (IGPL). The assessee's main objection was that the data of IGPL was not publicly available. Hence, the international transaction must not be bench mark against IGPL. The objection of the assessee was that the AO was authorized for a fresh analysis only if the assessee was within ITA No.1690 &1622/Ahd/2010 &3201/Ahd/2011 Pino Bisazza Glass Pvt. Ltd. Vs. ACIT, C-5, Ahmedabad 2005-06 & 2007-08
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the provision of section 92C(3) (c) of the Act. It was also objected that the assessee had earned net operating profit margin at 9% from its transaction with AE, whereas the comparable companies selected by the assessee had earned an average operating profit margin at 8.34%. It was also contested that the TPO had wrongly selected secret comparables of IGPL, being not in public knowledge. However, the DRP was not convinced and held that the comparables as selected by the assessee were in the business of normal glass consumer product, whereas the assessee had manufactured a special luxury glass product. According to the panel, the TPO was correct in asking information under Section 133(6) of IT Act. The TPO has not made cherry picking. The TPO had removed the comparison of Karishma Mosaic Pvt. Ltd. because the profit ratio was very high. The Bissazza India was also not considered because the transaction was with related parties. According to the panel, there was no requirement to interfere with the action of the TPO.
15. In the light of the above discussion, we have heard both the sides. In the grounds as reproduced above we have noted that the action of the TPO of making assessment was as per law and there was no infringement of any of the provision of the Act. We have also not found any reason to interfere with the general observation of the DRP. The grounds being general in nature, without pointing out any specific default, therefore, we find no force in these general grounds of the assessee. Hence, liable to dismissed. We hold accordingly.
16. Ground No.4, 5, 6 and 7 is reproduced below:
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"4. Erroneous rejection of Appellant's economic analysis The learned AO/TPO and / or the DRP has erred in upholding the rejection of the economic analysis and comparable companies adopted by the Appellant without providing any cogent reasons.
5. Erroneous selection of Italia Glass Private Limited (IGPL) as a comparable company.
5.1 The learned AO/TPO has erred in selecting and DRP in upholding the selection of IGPL as a comparable company while applying TNMM in case of the appellant by disregarding provisions of Rule 10B(2) of the Income-Tax Rules, 1962(the Rules).
5.2 The learned AO/TPO and or the DRP has erred in law and on facts in selecting only on comparable company while applying TNMM in case of the Appellant as a single comparable does not appropriately reflect the industry benchmark.
5.3 The learned AO/TPO and or the DRP has erred in using data obtained from section 133(6) of the Act route which is not available in the public domain to the Appellant while undertaking benchmarking analysis in case of the appellant.
5.4 Without prejudice, the learned AO/TPO and or the DRP erred in not granting adjustments for differences in the functional and risk profile of the Appellant vis-à-vis comparable company that performs functions and assumes risks that are significantly different than that of the Appellant disregarding Rule 10B(1)(e)(iii) and 10B(3) of the Rules.
6. Without prejudice, adjustment to be mae with reference to international transaction Without prejudice, the learned AO/TPO and/or the DRP erred in making reference pricing adjustment considering sales to AEs as well as domestic sales instead of restricting adjustment with reference to international transaction only.
Without prejudice, the learned AO/TPO and/or the DRP erred in computing Profit Level Indicator (PLI) of the appellant while applying TNMM to benchmark the international transactions.
7. Benefit of-/+5% range ITA No.1690 &1622/Ahd/2010 &3201/Ahd/2011 Pino Bisazza Glass Pvt. Ltd. Vs. ACIT, C-5, Ahmedabad 2005-06 & 2007-08
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The AO/TPO and /or the DRP erred in law in not allowing the standard deduction of 5% as per the proviso to the section 92C(2) of the Act."
17. A propos to ground no.4, we have already expressed that the comparison of the product is an essential ingredient for determining the ALP. In the light of the foregoing paragraphs, we have held that the product manufactured by the comparables as selected by the assessee were not matching with the product of the assessee. Those comparable companies were manufacturing glass bottles, glass wares, etc. thus those products were completely different from the glass mosaic manufacture by the assessee. We, therefore, hold that the rejection of the comparable companies as adopted by the assessee was on reasonable basis. Hence the view taken by the Revenue Authorities is hereby affirmed and dismissed this ground of the assessee.
18. A propos to ground no.5 and its sub grounds, the undisputed fact is that the TPO had issued the notice under Section 133(6) of the IT Act to Italia Glass Pvt. Ltd. (in short IGPL). The purpose of selection of IGPL was that the assessee had stated in the transfer pricing documentation that there were no major players in glass mosaic products hence as per TPO IGPL was the best comparable available for bench marking. In this connection as far as the objection of the assessee that the datas of IGPL were not in public domain, we have already taken a view in above paragraphs that in a situation when the assessee had been granted opportunity to peruse the information gathered under Section ITA No.1690 &1622/Ahd/2010 &3201/Ahd/2011 Pino Bisazza Glass Pvt. Ltd. Vs. ACIT, C-5, Ahmedabad 2005-06 & 2007-08
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133(6), then such an objection of public domain do not survive therefore the issue raised as per sub ground 5.3 is hereby rejected.
18.1 It was also objected at the TPO level that the IGPL was also engaged in the distribution activities. The undisputed fact is that the IGPL is engaged in glass mosaic business. The product similarity is one of the fundamental bases choosing a comparable. As far as the question of difference in one of the activity is concern, a view has already been taken that after economic analysis the said distinguishing factor can be filtered and thereupon ALP can be determined. Because of this reason certain guidelines have been described. Hence for the year under consideration this matter should also go back for re-adjudication at the level of the AO. We therefore hold that for the purpose of removal of grievance as raised in sub ground 5.4 and 5.1 the same can be redressed by restoring the issue back to the stage of the AO for afresh consideration as per the directions laid down while deciding such controversy AY 2005-06 (supra).
19. A propos to ground no.6 a view has already been taken that the FAR analysis pertaining to the domestic sales can also be taken into account in respect of the identical product. The PLI is required to be re- computed in the light of those directions. Resultantly, this ground of the assessee may be treated as allowed for statistical purpose.
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20. A propos to ground no.7, we hereby hold that this ground has now become consequential because the ALP is yet to be determined and thereafter the said proviso of section 92C(2) can only be applied.
21. In the result, appeal for A.Y. 2007-08 is partly allowed that too for statistical purpose.
22. In the result all the three appeals are partly allowed for statistical purpose.
Sd/- Sd/-
(A. MOHAN ALANKAMONY) ( MUKUL Kr. SHRAWAT )
ACCOUNTANT MEMBER JUDICIAL MEMBER
Ahmedabad; Dated / /2013
Prabhat Kr. Kesarwani, Sr. P.S.
TRUE COPY
आदे श कȧ ूितिलǒप अमेǒषत/Copy
षत of the Order forwarded to :
1. अपीलाथȸ / The Appellant
2. ू×यथȸ / The Respondent.
3. संबंिधत आयकर आयुƠ / Concerned CIT
4. आयकर आयुƠ(अपील) / The CIT(A)-III, Ahmedabad
5. ǒवभागीय ूितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad
6. गाड[ फाईल / Guard file.
आदे शानुसार/ BY ORDER, स×याǒपत ूित //True Copy// उप/सहायक पंजीकार (Dy./Asstt.Registrar) उप/ आयकर अपीलीय अिधकरण, अिधकरण, अहमदाबाद / ITAT, Ahmedabad