PCIT Vs Toyota Tsusho India Private Limited (Karnataka High Court)
Karnataka High Court held that for AY 2014-2015, assessee couldn’t be classified as wholesale trader as both the specified conditions are not satisfied. Accordingly, in terms of notification no. 30/2013 tolerance range of 3% to be adopted.
Facts- The Assessee is trading in automobile components, processing of steel products and providing logistic services, primarily catering to the automotive industry. During the year, in trading segment, TPO also rejected the transfer pricing studies and determined the mean PLI of the selected comparables at 4.715%. And, the arms length margin of operating profit/ operating costs at 4.95%. On the aforesaid basis, the learned TPO computed the transfer pricing adjustment at Rs. 25,23,76,521/- in the trading segment. In so far as manufacturing segment is concerned, the learned TPO determined the arms length PLI at 3.45% and accordingly made in adjustment of Rs. 6,02,89,351/- for the manufacturing segment.
DRP disposed of the objections raised by the Assessee in terms of the directions issued on 26.09.2017 u/s. 144-C(5) of the Act. One of the objections raised by the Assessee related to the adoption of tolerance limit of 1% variation u/s. 92-C(2) of the Act instead of 3% in respect to the trading segment. However, DRP rejected the said objection. The learned AO passed the final Assessment Order on the basis of the aforesaid directions on 21.07.2022.
