The Issues Arise Out Of The Tribunal's Judgment Concerning v. Tara Jewels

Priya Soparkar IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.445 OF 2017 The Pr. Commissioner of Income Tax-9 V/s. M/s Bunge India Pvt. Ltd. --- Mr.Tejveer Singh Mastan Singh for the Appellant.Mr.Sanjiv M. Shah for the Respondent. --- … Appellant … Respondent CORAM : AKIL KURESHI AND S.J.KATHAWALLA, JJ. DATE : JUNE 03, 2019. P.C.:- 1.This appeal is filed by the revenue to challenge the judgment of the Income Tax Appellate Tribunal (“Tribunal” for short). Following questions were argued before us :- “(i)Whether on the facts and circumstances of thecase and in law, the ITAT was correct in settingaside the adjustment made by the TPO in respectof import of raw material to the file of the TPO, forpro-rata adjustment considering only the AEtransactions, when this was not a ground raisedeither by Revenue or by the assessee and segmentalaccounts (in respect of AE and non-AE transactionswere not available in the case? (ii)Whether on the facts and circumstances ofthe case and in law, the ITAT was correct in facts and circumstances of case and in law, in terms ofRule 10B(1)(e), under the Transaction Net MarginMethod (TNMM), it is permissible to apply the netprofit margin realized by the assessee from theentity as a whole in place of the net profit marginrealized by the assessee from the internationaltransaction entered into with the AE?” 2.The issues arise out of the Tribunal's judgment concerning the correct method to be applied for determining arm's lengthprice of the international transaction between the assessee andthe associated enterprise. The Transfer Pricing Officer (“TPO” forshort) had made the adjustment to the entire segment of themanufacturing activity instead of making the adjustment foronly international transaction. The Tribunal held that the TPOwas not justified in making adjustment to the entire segment ofmanufacturing activity without restricting the same to themanufacturing transaction. The Tribunal in the process reliedupon and referred to the decision of the Division Bench of thisCourt in case of Commissioner of Income-Tax Vs. Tara Jewels Exports P. Limited[1]. The principles laid down in the saiddecision have been followed consistently in later decisionssuch as in cases of Commissioner of Income Tax Vs. Thyssen 1(2016) 381 ITR 404 (Bom) Krupp Industries India P. Ltd.[1] and Commissioner of Income Tax Vs. Alstom Projects India Ltd.[2]. In the result, do not findany error in view of the Tribunal. The appeal is dismissed. (S.J.KATHAWALLA, J.) (AKIL KURESHI, J.) …. 1(2016) 381 ITR 413 (Bom) 2(2017) 394 ITR 141 (Bom)