Court :Delhi bench of the Income-tax Appellate Tribunal
Citation : M/s Panasonic India Pvt Ltd Vs. Income Tax Officer (2010-TII-47-ITAT-DEL-TP)
Brief: Recently, the Delhi bench of the Income-tax Appellate Tribunal (the Tribunal) in the case of M/s Panasonic India Pvt Ltd Vs. Income Tax Officer (2010-TII-47-ITAT-DEL-TP), has upheld the aggregation of transactions where the Functions, Assets & Risks underlying those transactions are similar. The Tribunal also concluded that reimbursement of advertisement expenses received by a Distributor from its Associated Enterprise (AE) must be treated as operating income for computing profitability of the taxpayer under the Transactional Net Margin Method (TNMM) method.
Further, the Tribunal accepted the taxpayer’s claim of relying upon multiple year financial data, both in the case of the taxpayer and the comparable companies, as the taxpayer was able to demonstrate that a fall in its profitability in the year under examination was attributable to business dynamics.
Facts of the case
- · The taxpayer is an Indian company engaged in the business of trading of household appliances, consumer electronics, office automation and telecommunication products and provision of agency services. During Financial year (FY) 200 1-02, the taxpayer operated in three segments:
o Consumer Product Division (CPD);
o System Products Division (SPD); and
o Industrial Sales Division (ISD).
