IN THE ITAT PUNE BENCH ‘A’
Demag Cranes & Components (India) (P.) Ltd.
Versus
Deputy Commissioner of Income-tax, Cir. 1(2), Pune
IT APPEAL NO. 1683 (PN) of 2011
[ASSESSMENT YEAR 2007-08]
DECEMBER 31, 2012
ORDER
G.S. Pannu, Accountant Member
This appeal by the assessee is directed against the order of the Dy. CIT Cir. 1(2) Pune passed u/s 143(3) r.w.s. 144C(B) of the Income-tax Act, 1961 (in short “the Act”) dated 25-10-2011 pertaining to the assessment year 2007-08, which is in conformity with the directions given by the Dispute Resolution Panel, Pune (in short ‘the DRP’) in order dated 20-5-2011.
2. In brief, background is that the appellant is a company incorporated under the provisions of Indian Companies Act, 1956 and is, inter alia, engaged in the business of providing state of art material handling solutions to Indian customers. The appellant is a wholly owned subsidiary of Demag Cranes & Components, GmbH, Germany. The assessee filed a return of income for the assessment year 2007-08 declaring a total income of Rs. 8,81,20,598/- which was subject to a scrutiny assessment. The Assessing Officer noticed that during the year under consideration, assessee had entered into ‘international transactions’ pertaining to provision of material handling solutions with its Associated Enterprises (in short ‘AE’s) within the meaning of section 92B(1) of the Act. Section 92(1) of the Act requires that any income arising from an international transaction shall be computed having regard to the Arm’s Length Price (in short ‘ALP’). The computation of ALP u/s 92C of the Act in relation to the international transactions carried out by the assessee was referred by the Assessing Officer to Transfer Pricing Officer (in short TPO) in terms of section 92CA(1) of the Act. The TPO vide his order passed u/s 92CA(3) of the Act, after allowing an opportunity to the assessee of being heard, determined the ALP in relation to the international transaction by enhancing the same by Rs. 6,36,05,887/-. The aforesaid adjustment to the international transactions determined by the TPO has since been considered by the Assessing Officer while computing the total income of the assessee. The Assessing Officer has computed the total income of the assessee as per section 92C(4) of the Act having regard to the ALP of the international transactions so determined by the TPO and accordingly an addition of Rs. 6,36,05,887/- has been made to the total income The subject matter of dispute before us revolves around the transfer pricing adjustment of Rs. 6,36,05,887/- made to the international transactions undertaken by the assessee with its AEs. Notably, the Assessing Officer passed the impugned order u/s 143(3) read with section 144C(13) of the Act in pursuance to the directions issued by the Disputes Resolution Panel (in short DRP) vide its order dated 20-5-2011, whereby the determination of ALP by the TPO was affirmed. Against such framing of assessment by the Assessing Officer, the assessee is in appeal before us raising the following Grounds of Appeal.
“On the facts and in the circumstances of the case and in law, the learned AO based on directions of Hon’ble DRP has:
