Case Law Details
Celio Future Fashion Pvt. Ltd. Vs ACIT (ITAT Mumbai)
ITAT Mumbai held that Retail Sale Price Method (RPM) is the most appropriate method for benchmarking the international transaction of ‘import of men’s wear for resale’ between Celio Future Fashion Pvt. Ltd. and its associated enterprises.
Facts- The assessee is a company engaged in the business of trading in ready-made garments and accessories under the name and style of “Celio”. For the year under consideration, the return filed by the assessee was selected for scrutiny under CASS and statutory notices u/s. 143(2) as well as Section 142(1) of the Act were issued and served on the assessee.
During the assessment proceedings, it was noticed that the assessee had entered into international transactions with its associated enterprises. Accordingly, a reference u/s. 92CA(1) of the Act was made to TPO for computation of arm’s length price in relation to international transactions. During the year under consideration, the assessee, inter-alia, entered into an international transaction pertaining to ‘import of men’s wear for resale’ with its associated enterprise.
The assessee purchased finished goods (men’s wear) from its associated enterprise for the purpose of stock and sale in the domestic market. For benchmarking the said international transaction, the assessee applied Resale Price Method (RSM) as the most appropriate method. TPO, vide order passed u/s. 92CA(3), rejected the benchmarking analysis conducted by the assessee and applied Transactional Net Margin Method (TNMM) as the most appropriate method and computed the transfer pricing adjustment.
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