IN THE ITAT BANGALORE BENCH ‘A’
Textronix India (P.) Ltd.
Versus
Deputy Commissioner of Income-tax
IT Appeal No. 1334 (Bang.) of 2010
[Assessment year 2006-07]
October 31, 2012
ORDER
N.V. Vasudevan, Judicial Member – This is an appeal filed by the assessee against the order dated 20-9-2010 passed by the DCIT, Circle 12(4), Bangalore, u/s 143(3) r.w.s.l44C of the Income-tax Act, 1961 [hereinafter referred to as “the Act”].
2. The assessee has filed concise grounds of appeal. Ground Nos.9 and 10 in the concise grounds of appeal were not pressed and the same are dismissed as not pressed. Ground No. 1 is general in nature and caffs for no specific adjudication.
3. Ground Nos.2 to 7 raised by the assessee are with regard to transfer pricing adjustment made by the AO which was confirmed partly by the Dispute Resolution Panel (DRP).
4. The material facts with regard to the aforesaid issue are as follows: The assessee is a company which is engaged in the business of distribution of telecom equipment, logic analysers and other test and measurement equipments and accessories on behalf of its Associate Enterprise (AE). Besides the above, if a customer in India wants to purchase the equipment directly from the AE, the assessee acts as intermediary and derives commission income for services rendered. These are the two streams of revenue which the assessee derives from carrying out transactions with its AE. It is not in dispute that the transaction between the assessee and its AE was an international transaction and the income arising from such transaction has to be computed in accordance with the provisions of sec.92 of the Act that having regard to the Arms’ Length Price (ALP). The assessee conducted a transfer pricing study in respect of its trading activity as well as commission agency activity (which is referred to as indent sales activity in the TPO’s order). The most appropriate method selected by the assessee was TNMM. The stand of the assessee in the transfer pricing study, the TPO’s adjustment in respect of the claim of the assessee and the DRP’s directions may be summarized in the form of following chart:
