Karcher Cleaning Systems Pvt Ltd. Vs ACIT (ITAT Delhi)
The assessee is a pure trading company involved in the distribution activity without adding any value to the purchased product and hence the RPM is the most appropriate method.
Facts-
The assessee is a subsidiary of Karcher Beteilgungs GmbH which started its commercial activities on 16.04.2011 and is primarily engaged in the business of importing and resale of industrial cleaning systems in India.
Transaction pertaining to the purchase of goods for the purpose of resale in India has also been analyzed using Internal Comparable Uncontrolled Price Method.
During the course of transfer pricing assessment proceedings, the TPO objected to the arm’s length margin computed in relation to the trading segment, by rejecting RPM adopted by the assessee for the trading segment and applied Transactional Net Margin Method (TNMM) to benchmark the trading segment.
Conclusion-
Held that the assessee is a pure trading company involved in the distribution activity without adding any value to the purchased product and hence the RPM is the most appropriate method. We, accordingly, direct the Assessing Officer/TPO to accept RPM as the most appropriate method and decide the issue accordingly.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal by the assessee is preferred against the order dated 20.10.2016 framed u/s 143(3) r.w.s 144C(13) of the Income-tax Act, 1961 [hereinafter referred to as ‘The Act’] pertaining to Assessment Year 201213.
2. Briefly stated, the facts of the case are that the assessee is a subsidiary of Karcher Beteilgungs GmbH which started its commercial activities on 16.04.2011 and is primarily engaged in the business of importing and resale of industrial cleaning systems in India.
3. In its TP documentation, a brief summary of economic analysis in respect of trading activities can be summarized as under:
