Yazaki India P Ltd., (formerly known as Yazaki (I) Ltd.,), Pune V. Assistant Commissioner of Income-tax, Pune

ITA 621/PUN/2014

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 8932 (ITAT-PUNE)
• Duration Of Justice: 5 year(s) 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-07-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 08-07-2019
• Assessment Year: 2009-2010
• Appeal Filed On: 01-04-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Transfer pricing; International transaction; Set aside
• Section: 92B; 92A; 92

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH C, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER . / ITA NO.621/PUN/2014 / ASSESSMENT YEAR : 2009-10 YAZAKI INDIA PRIVATE LIMITED (FORMERLY KNOWN YAZAKI INDIA LIMITED), GAT NO.93, SURVEY NO.166, HIGH CLIFF INDUSTRIAL ESTATE, KESNAND, PUNE 412 207 PAN : AAACT5570F VS. DCIT, CIRCLE-12, PUNE (APPELLANT) (RESPONDENT) / ORDER PER R.S.SYAL, VP : THIS APPEAL BY THE ASSESSEE EMANATES FROM THE FINAL ASSESSMENT ORDER DATED 23-01-2014 PASSED BY THE ASSESS ING OFFICER (AO) U/S.143(3) R.W.S.144C(13) OF THE INCOME-T AX ACT, 1961 (HEREINAFTER ALSO CALLED THE ACT) IN RELATION TO THE ASSESSMENT YEAR 2009-10. APPELLANT BY SHRI DHANESH BAFNA, MS. CHANDNI SHAH & SHRI PAVAN DUDHEDIYA RESPONDENT BY SHRI SANJIV SHANKAR DATE OF HEARING 08-07-2019 DATE OF PRONOUNCEMENT 11-07-2019 ITA NO.621/PUN/2014 YAZAKI INDIA PRIVATE LIMITED 2 2. THE FIRST ISSUE IS AGAINST THE DISALLOWANCE OF RS.2,96,50, 650/- MADE BY THE AO U/S.40A(2)(A) OF THE ACT FOR PAYMENT OF ADMINISTRATIVE SUPPORT SERVICE CHARGES. 3. SUCCINCTLY, THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A MANUFACTURER OF INTEGRATED HARNESS AND ELECTRICAL DISTRIBUTION SYSTEM FOR THE AUTOMOTIVE INDUSTRIES. IT MANUFACTURES WIRING HARNESSES FOR VARIOUS SEGMENTS OF THE AUTOMOBILE INDUSTRY INCLUDING PASSENGER CARS AND COMMERCIAL VEHICLES. IT ALSO SUPPLIES WIRING HARNESSES FOR APPLICATIONS SUCH AS AIR BAG ASSEMBLIES . THE ASSESSEE FILED ITS RETURN DECLARING NIL INCOME. DURING THE CO URSE OF ASSESSMENT PROCEEDINGS, THE AO OBSERVED THAT THE ASSESSEE PAID A SUM OF RS.2,96,50,650/- AS ADMINISTRATIVE SERVICE CHARGES TO ITS HOLDING COMPANY TACO ONE OF THE JOINT VENTURE PARTNERS HAVING 50% OF SHARES. HE FURTHER NOTICED THAT APPROXIMAT ELY SIMILAR AMOUNT WAS PAID AS ROYALTY TO THE OTHER HOLDING COMPA NY YAZAKI CORPORATION, JAPAN HAVING REMAINING 50% OF SHARE S. THERE IS NO DISPUTE IN THIS APPEAL AS TO THE PAYMENT OF ROYA LTY. THE ASSESSEE WAS CALLED UPON TO JUSTIFY THE PAYMENT OF ADMINISTRATIVE SERVICE CHARGES AMOUNTING TO RS.2,96,50,650/- TO TACO. THE ASSESSEE SUBMITTED THAT IT RECEIVED SUPPORT SERV ICES IN VARIOUS AREAS, SUCH AS MARKETING, HUMAN RESOURCES, FINAN CE, ITA NO.621/PUN/2014 YAZAKI INDIA PRIVATE LIMITED 3 INFRASTRUCTURE ETC. WHICH HELPED IT IN CARRYING ON ITS BUSINES S EFFICIENTLY. A FURTHER ELABORATION OF SUCH SUPPORT SERVICES WAS GIVEN IN DETAIL. THE AO NOTICED THAT THE ASSESSEE ENTERED INTO AN AGREEMENT WITH TACO IN THE YEAR OF ITS INCORPORATION IN 1998. TACO WAS PROVIDING SERVICES AT START-UP PHASE AND ALSO OP ERATING PHASE. THE ASSESSEE HAD REIMBURSED ALL THE EXPENSES IN CURRED BY THE TACO FOR GETTING PROFESSIONAL SERVICES FROM OUTSIDE SO URCES. IN ADDITION, THE ASSESSEE WAS INCURRING ALL THE ADMINISTRATIVE EXPENSES, LIKE, ADVERTISEMENT, SALES PROMOTION, AUDIT FEE, INTE RNAL AUDIT FEE, CONVEYANCE, STAFF WELFARE ETC. THE AO FURTHER NOTICED THAT THE FEES PAYABLE BY THE ASSESSEE TO TACO WAS FIXED AT A PERCENTAGE OF TOTAL TURNOVER WHICH CAUSED SERIOUS DOUBT AS TO ITS GENUINENESS. THE ASSESSEE WAS ASKED TO PRODUCE DETAILS OF SERVICES AND DOCUMENTARY EVIDENCE FOR THE SERVICES AVAILED FROM T ACO AND THEIR REASONABLE MARKET PRICE, WHO SUBMITTED CERTAIN DETA ILS. IN THIS BACKDROP OF FACTS, THE AO HELD THAT THE ASSESSEE EITH ER DID NOT AVAIL ANY SERVICES FROM TACO OR THESE WERE IN THE NATUR E OF STEWARDSHIP SERVICES. HE MADE DISALLOWANCE FOR THE FULL AMO UNT PAID AT RS.2,96,50,650/- U/S.40A(2)(A) OF THE ACT, AGAI NST WHICH THE ASSESSEE HAS APPROACHED THE TRIBUNAL. ITA NO.621/PUN/2014 YAZAKI INDIA PRIVATE LIMITED 4 4. WE HAVE HEARD BOTH THE SIDES GONE THROUGH THE RELEVAN T MATERIAL ON RECORD. THE AO HAS RECORDED IN THE ORDER TH AT THE ASSESSEE ENTERED INTO A SIMILAR AGREEMENT FOR AVAILING SUCH SERVICES IN THE YEAR 1998. THE LD. AR SUBMITTED THAT THE ASSESSEE IS CONTINUOUSLY AVAILING SUCH SERVICES FROM TACO AND NO SUCH DISALLOWANCE HAS EVER BEEN MADE IN THE PAST. BE THAT AS IT MAY, WE HAVE GONE THROUGH THE CONTENTS OF THE ADMINISTRATIVE SERVICES AGREEMENT (ASA) VALID FOR THE YEAR UNDER CONSIDERATION W HICH WAS ENTERED INTO ON 23-03-2007, WHOSE COPY IS AVAILABLE AT PAGE 286 ONWARDS OF THE PAPER BOOK. ARTICLE 2 OF THE ASA NAR RATES THE SERVICES TO BE RENDERED BY TACO TO THE ASSESSEE WHICH A RE AS UNDER:- A. SUPPORT FOR LAND ACQUISITION AND DEVELOPMENT. B. SUPPORT FOR PAYROLL AND BENEFIT ADMINISTRATION (PROVIDENT FUND, SUPERANNUATION, GRATUITY) C. SUPPORT FOR LIAISON WITH BANKS AND FINANCIAL INSTITUTIONS. D. SUPPORT FOR LEGAL AND TAXATION SERVICES E. SUPPORT FOR HUMAN RESOURCE DEVELOPMENT & TRAINING FACILITIES F. COMMUNICATION INFRASTRUCTURE ADVISORY SERVICES G. SUPPORT FOR MANPOWER RECRUITMENT H. SUPPORT FOR MAINTAINING INDUSTRIAL RELATIONS I. SUPPORT FOR PROVIDING MARKETING AND DISTRIBUTION NETWORK J. SUPPORT FOR LIAISON WITH GOVERNMENT AUTHORITIES K. SUPPORT FOR VENDOR DEVELOPMENT EFFORTS ITA NO.621/PUN/2014 YAZAKI INDIA PRIVATE LIMITED 5 5. CONSIDERATION HAS BEEN SET OUT IN PARA 2.2 OF THE S AME ARTICLE AS AN AMOUNT EQUAL TO 5% OF NET PROCESSING FEES OF ALL PROD UCTS PROCESSED, ASSEMBLED AND MANUFACTURED. THE TERM NET PROCESSING FEES HAS BEEN DEFINED UNDER ARTICLE 1 TO MEAN THE: `COMPANYS INVOICED PRICES FOR THE PRODUCTS LESS MATERIAL AN D COMPONENTS, LESS PACKING AND WAREHOUSE CHARGES, TAXES A ND DUTIES TO THE EXTENT SET FORTH ON THE INVOICE. ON GOING THROUGH ARTIC LE 2 OF THE ASA, IT IS BORNE OUT THAT TACO AGREED TO PROVIDE SUPPO RT SERVICES TO THE ASSESSEE IN VARIOUS FIELDS, SUCH AS, ADMINIS TRATION, FINANCING, LEGAL, HRD, MARKETING AND DISTRIBUTION, LIAISON WITH GOVERNMENT AUTHORITIES AND VENDOR DEVELOPMENT ETC. OUR ATTENTION HAS BEEN DRAWN TOWARDS E-MAIL CORRESPONDENCE BETW EEN TACO AND ASSESSEE, COPIES OF WHICH HAVE BEEN PLACED AT PAGE 305 ONWARDS OF THE PAPER BOOK. PAGE 305 IS AN E-MAIL FROM SH . G.K. RAMESH OF TACO TO SH. SUDHEENDRA MUDIKERI OF THE ASSESSE E COMPANY IN RESPECT OF CERTAIN CORRECTIVE ACTIONS TO BE TAKEN FOR NCS. IT HAS FURTHER BEEN WARNED THAT: `IF THE ACTIVITIES ARE NOT COMPLETED, WE MAY LOSE THE EMS CERTIFICATE. PAGE 306 IS AN E - MAIL OF R.S. THAKUR OF TACO TO SH. PRASHANTH NAYAK OF THE ASSESSEE COMPANY ON AUDIT REPORT. IN THIS E-MAIL ALSO, CER TAIN CONCERNS HAVE BEEN RAISED ABOUT MATERIAL CONSUMPTION VARIAN CE. ITA NO.621/PUN/2014 YAZAKI INDIA PRIVATE LIMITED 6 PAGE 312 OF THE PAPER BOOK IS AN E-MAIL UNDER WHICH SCOP E OF INTERNAL AUDIT OF THE ASSESSEE COMPANY HAS BEEN APPROVED BY THE AUDIT COMMITTEE. IT HAS BEEN EMPHASIZED THAT THE SAME NEEDS TO BE STARTED AS SOON AS POSSIBLE. IN THE SAME FASHION, SUCH E -MAILS OF CORRESPONDENCE BETWEEN THE ASSESSEE AND TACO ARE GOING ON FROM PAGES 305 TO PAGE 422 OF THE PAPER BOOK. PAGES 423 TO 429 ARE COPIES OF EXTRACTS OF THE MINUTES OF THE BOARD OF DIRECTORS MEETINGS HELD ON 08-07-2008 AND 30-09-2008 SUBSTANTIATING RECEIPT OF ADMINISTRATIVE SUPPORT SERVICES. ON PAGE 424 OF TH E PAPER BOOK, THE BOARD OF DIRECTORS IN THEIR MEETING HELD ON 08-07-2008 DISCUSSED ABOUT FRAMING OF COPPER HEDGING PO LICY ON THE BASIS OF INITIAL TRIALS AND DISCUSSION WITH THE TACO. PAGE 425 RECORDS MINUTES OF MEETING OF BOARD OF DIRECTORS HELD ON 30-09-2008 DISCUSSING STATUS OF ACTION POINTS IN WHICH THERE IS REFERENCE TO THE HELP RECEIVED FROM TACO. ITEM AT SR. NO .15 OF THE MINUTES OF THE BOARD MEETING IS THAT: THE BOARD WAS INFORME D THAT THE COMPANY MANAGEMENT HAD RECEIVED DIRECTIVES FROM TA CO TO BE FOLLOWED WHILE DECIDING THE PRICES OF NEW MODELS WITH THE CUSTOMERS SO ON AND SO FORTH. AS AGAINST THE AOS RECO RDING THAT THE ASSESSEE DID NOT FURNISH ANY EVIDENCE OF SERVICES, WE FIND THAT THE ASSESSEE DID FURNISH SUCH DETAILS TO THE AO, WHICH IS FOR TIFIED ITA NO.621/PUN/2014 YAZAKI INDIA PRIVATE LIMITED 7 BY THE ASSESSEES LETTER DATED 19-02-2013 ADDRESSED TO THE AO, WHOSE COPY HAS BEEN PLACED AT PAGE 299 ONWARDS OF THE PAPER BOOK. IN THIS LETTER, IT HAS BEEN MENTIONED THAT THE ASSESSEE SUBMITTED SEVERAL DOCUMENTS IN RESPECT OF RECEIPT OF SERVICES FROM TACO, SUCH AS COPIES OF E-MAIL COMMUNICATIONS, COPIES OF INVOICES, EXTRACTS OF THE MINUTES OF MEETINGS OF BOARD OF DIR ECTORS HELD ON 08-07-2008 AND 30-09-2008. IN VIEW OF THE AFO RESAID FACTUAL PANORAMA, IT IS MANIFEST THAT TACO DID PROVIDE ADMINISTRATIVE SUPPORT SERVICES TO THE ASSESSEE, FOR WHICH THE RE IS AMPLE EVIDENCE. THE IMPUGNED ORDER IS OVERTURNED TO THIS E XTENT. 6. NOW THE QUESTION ARISES AS TO WHETHER OR NOT THE PAYMENT MADE BY THE ASSESSEE TO TACO FOR SUCH SERVICES @5% OF NET PROCESSING FEES IS REASONABLE OR AT PREVALENT MARKET RATES? WE HAVE NOTICED ABOVE THAT NET PROCESSING FEES HAS BEEN DEFIN ED IN THE ASA ITSELF TO MEAN INVOICE PRICES FOR THE PRODUCTS LESS MA TERIAL AND COMPONENTS, LESS PACKING AND WAREHOUSE CHARGES, TA XES AND DUTIES TO THE EXTENT SET FORTH ON THE INVOICE. A COPY OF TH E ASSESSEES PROFIT AND LOSS ACCOUNT HAS BEEN PLACED AT PAGE 197 OF THE PAPER BOOK, WHICH SHOWS AMOUNT OF SALES FOR THE YEAR UNDER CONSIDERATION AT RS.225.29 CRORE. THERE ARE MATERIAL COSTS OF RS.168.80 CRORE; EMPLOYEES COST AT RS. 20.79 CRORE AND OTHER ITA NO.621/PUN/2014 YAZAKI INDIA PRIVATE LIMITED 8 EXPENSES. THE ASSESSEE PAID A SUM OF RS. 2.96 CRORE TOWARDS ADMINISTRATIVE SUPPORT SERVICES, WHICH COMES TO AROUND 1.31% OF SALES. 7. THE LD. AR STATED THAT TACO RENDERED SIMILAR SERVICES TO OTHER RELATED CONCERNS AS WELL. HE SUBMITTED THAT THE AO IN S OME OF SUCH CASES MADE SIMILAR DISALLOWANCE U/S 40A(2)(A) OF THE ACT, WHICH ISSUE HAS SINCE BEEN DECIDED BY THE TRIBUNAL. HE DR EW OUR ATTENTION TOWARDS A COPY OF THE ORDER DATED 09-12-2015 PAS SED BY THE PUNE BENCHES OF THE TRIBUNAL IN TATA JOHNSON CONTROLS AUTOMOTIVE LTD. VS. DCIT (ITA NO.1450/PN/2011). IN THAT CA SE, TACO RENDERED SIMILAR SERVICES TO TATA JOHNSON CONTROLS AUTOMOTIVE LTD. THE AO DISALLOWED THE ENTIRE AMOUNT. THE LD. CIT(A) ALLOWED 25% OF SUCH EXPENDITURE. WHEN THE MATTER C AME UP BEFORE THE TRIBUNAL, IT ORDERED TO DELETE THE ENTIRE ADDITION . IN THAT CASE, THE REMUNERATION WAS PAID TO TACO @1% OF TURNOVE R IN ADDITION TO REIMBURSEMENT OF EXTERNAL COSTS INCURRED BY TAC O, IF ANY. SIMILAR ISSUE CAME UP IN THE CASE OF ANOTHER GROUP COMPANY, NAMELY, TATA FICOSA AUTOMOTIVE SYSTEMS LTD. VS. DCIT (2017) 88 TAXMANN.COM 899 (PUNE TRIBUNAL). IN THAT CASE, TACO REND ERED SIMILAR SERVICES TO TATA FICOSA AUTOMOTIVE SYSTEMS LTD. AS GIVEN TO THE ASSESSEE UNDER CONSIDERATION. PAYMENT WAS MADE BY THAT ITA NO.621/PUN/2014 YAZAKI INDIA PRIVATE LIMITED 9 ASSESSEE TO TACO @ 2% OF NET SALES. THE AO MADE SUCH DISALLOWANCE, WHICH WAS SUSTAINED BY THE LD. CIT(A). WHEN THE MATTER CAME UP FOR CONSIDERATION BEFORE THE TRIBUNAL, IT DIRE CTED TO DELETE THE ENTIRE DISALLOWANCE MADE U/S.40A(2)(A) OF THE ACT. ANOTHER GROUP MATTER IN DCIT VS. TATA TOYO RADIATOR PVT. LTD . CAME UP BEFORE THE TRIBUNAL IN ITA NO.1029/PN/2013 AND OTH ERS. IN THAT CASE, PAYMENT WAS MADE TO TACO @2% OF TOTAL TURNOVE R. VIDE ITS ORDER DATED 18-03-2016, THE TRIBUNAL DIRECTED TO DELE TE THE ENTIRE DISALLOWANCE. 8. TWO THINGS EMERGE FROM THE ABOVE DISCUSSION ON THIS ISSUE. FIRST IS THAT THE ASSESSEE DID AVAIL SERVICES FROM TACO. SEC OND IS THAT IT MADE PAYMENT MADE AS QUID PRO QUO FOR SUCH SERVICES AT 1.31% OF SALES. PAYMENTS MADE BY OTHER GROUP CONCERNS, EVEN AT A LITTLE HIGHER PERCENTAGE THAN THE ASSESSEE IN SOME CASES, HAV E BEEN FOUND TO BE REASONABLE BY THE TRIBUNAL. WHEN WE COMPARE THE RATE OF TURNOVER AT WHICH THE ASSESSEE PAID TO TACO FOR SUCH S ERVICES, VIS--VIS THAT PAID BY OTHER GROUP CONCERNS, THE SAME TURNS OUT TO BE QUITE REASONABLE AND NOT AT ALL EXCESSIVE SO AS TO ATTRACT THE PROVISIONS OF SECTION 40A(2)(A) OF THE ACT. ERGO, WE ORD ER TO DELETE THE ADDITION OF RS.2,96,50,650/- MADE ON THIS SCORE. THIS GROUND IS ALLOWED. ITA NO.621/PUN/2014 YAZAKI INDIA PRIVATE LIMITED 10 9. THE NEXT ISSUE CONCERNS THE TRANSFER PRICING ADDITION M ADE BY THE ASSESSING OFFICER. FACTS APROPOS THIS ISSUE ARE THAT THE ASSESSEE FURNISHED REPORT IN FORM 3CEB INDICATING SIX INTERNATIONAL TRANSACTIONS. THE AO MADE A REFERENCE TO THE TRANSFER PRICING OFFICER (TPO) FOR DETERMINING THE ARMS LEN GTH PRICE (ALP) OF SUCH INTERNATIONAL TRANSACTIONS. THE TPO DID N OT DISTURB THE ALP DETERMINATION BY THE ASSESSEE OF ANY TRANSACTIO N EXCEPT THE FIRST INTERNATIONAL TRANSACTION OF IMPORT WIRES, TERMINALS, CONNECTIONS, TAPS AND TUBES, SPARES AND OTHER RA W MATERIALS WITH TRANSACTED VALUE OF RS.73,10,21,926/-. TH E ASSESSEE USED THE COMPARABLE UNCONTROLLED PRICE (CUP) METHOD FOR DEMONSTRATING THAT THIS TRANSACTION WAS AT ALP. REJECTING THE APPLICATION OF THE CUP, THE TPO ADOPTED THE TRANSACTIONAL NET MARGIN METHOD (TNMM) AS THE MOST APPROPRIATE METHOD. HE COMPUTED THE ASSESSEES PLI (OPERATING PROFIT/SALES) FROM THIS TRANSACTION AT (-)3.78%. CONSIDERING FIVE COMPANIES AS COMPARABLES WITH THEIR AVERAGE PLI OF OP/SALES AT 3.74%, HE PROPOSED A TRANSFER PRICING ADJUSTMENT OF RS.17,04,59,22 4/-. THE AO ADOPTED THIS FIGURE OF TRANSFER PRICING ADJUSTMENT IN THE D RAFT ORDER AND MADE ADDITION FOR THE EQUAL SUM IN THE FINAL ASSES SMENT ITA NO.621/PUN/2014 YAZAKI INDIA PRIVATE LIMITED 11 ORDER, AGAINST WHICH THE ASSESSEE HAS COME UP IN APPEAL B EFORE THE TRIBUNAL. 10. WE HAVE HEARD BOTH THE SIDES AND GONE THROUGH THE RE LEVANT MATERIAL ON RECORD. IT IS NOTICED THAT THE DISPUTE IN THE INSTAN T APPEAL IS ONLY IN RESPECT OF THE INTERNATIONAL TRANSACTION OF `I MPORT OF RAW MATERIALS ETC. WITH TRANSACTED VALUE OF RS.73.10 CRORE. AS AGAINST THE ASSESSEE APPLYING THE CUP METHOD, THE TPO EMPLOY ED TNMM AS THE MOST APPROPRIATE METHOD. THE ASSESSEE HAS N OT AGITATED AGAINST THE APPLICATION OF THE TNMM AS THE MOST APPROPRIATE METHOD BEFORE THE TRIBUNAL. 11. IT HAS BEEN BROUGHT TO OUR NOTICE THAT THE ASSESSEE RES ORTED TO MUTUAL AGREEMENT PROCEDURE (MAP) IN TERMS OF ARTICLE 25 OF TH E DOUBLE TAXATION AVOIDANCE AGREEMENT (DTAA) BETWEEN INDIA AND JAPAN IN RESPECT OF ITS INTERNATIONAL TRANSACTION OF IMPORT OF RAW MATERIAL ETC. FROM YAZAKI CORPORATION, JAPAN (YCJ), WH ICH IS A PART OF THE OVERALL TRANSACTION UNDER CONSIDERATION. OUR A TTENTION WAS DRAWN TOWARDS PAGES 6 AND 7 OF THE PAPER BOOK, WH ICH IS A COPY OF THE ORDER DATED 10-09-2015 PASSED BY THE COMPE TENT AUTHORITY OF INDIA, REDUCING THE AMOUNT OF TRANSFER PRICING ADJUSTMENT CORRESPONDING TO TRANSACTIONS WITH YCJ FROM ITA NO.621/PUN/2014 YAZAKI INDIA PRIVATE LIMITED 12 RS.9,78,09,000/- TO RS.7,03,37,097/-, THEREBY ALLOWING RELIEF OF RS.2,74,71,903/-. IN VIEW OF THE FACT THAT THE ASSESSEE H AS ADMITTEDLY ACCEPTED THE RESOLUTION OF THE ISSUE UNDER THE MAP PROCEEDINGS IN RESPECT OF ITS INTERNATIONAL TRANSACTION WITH YCJ, WE COUNTENANCE THE ADDITION TO THIS EXTENT AT RS.7,03,37,097/- . 12. REMAINING TRANSFER PRICING ADJUSTMENT OF RS.7,26,50 ,224/- RELATES TO TRANSACTIONS OF IMPORT OF RAW MATERIALS ETC. FRO M THE ASSOCIATED ENTERPRISES (AES) OTHER THAN YCJ, WHICH WAS NO T PART OF THE MAP PROCEEDINGS. THE ASSESSEE HAS RAISED OBJECTION ONLY ON TWO ASPECTS OF SUCH ALP DETERMINATION BY THE AUTHORITIES, VIZ., COMPUTATION OF ITS OWN PLI BY THE TPO AT (-) 3.78% AND EXCLUS ION OF FCI TECHNOLOGY SERVICES LTD. FROM THE LIST OF COMPARABLES . 13. FIRST WE ESPOUSE THE ARGUMENT OF THE ASSESSEE ASSA ILING COMPUTATION OF ITS OWN PLI AT (-) 3.78% BY THE TPO. THE LD. AR SUBMITTED THAT THERE ARE CERTAIN ERRORS IN SUCH COMPUTATION, W HICH SHOULD BE SUITABLY AMENDED. 14. AT THIS JUNCTURE, IT IS RELEVANT TO NOTE THAT SECTION 295 OF THE ACT EMPOWERS THE CBDT TO MAKE RULES FOR THE PURPOSES OF THE ACT. SUB-SECTION (2) LISTS CERTAIN MATTERS IN RESPECT OF WHICH THE BOARD MAY PROVIDE FOR RULES. CLAUSE (H) OF SECTION 295(2) EMP OWERS THE ITA NO.621/PUN/2014 YAZAKI INDIA PRIVATE LIMITED 13 BOARD TO MAKE RULES PROVIDING FOR: `THE PROCEDURE FOR GIV ING EFFECT TO THE TERMS OF ANY AGREEMENT FOR THE GRANTING OF RELIEF IN R ESPECT OF DOUBLE TAXATION OR FOR THE AVOIDANCE OF DOUBLE TAXATION WHICH MAY BE ENTERED INTO BY THE CENTRAL GOVERNMENT UNDER THIS ACT. PURSUANT TO THE PRESCRIPTION OF SECTION 295(2)(H), RULES H AVE BEEN FRAMED UNDER PART IX-C OF INCOME-TAX RULES, 1962 COVER ING RULES 44G, 44GA AND 44H. INSTANTLY, WE ARE CONCERNED WITH R ULE 44H. SUB-RULE (4) OF RULE 44H STATES THAT THE EFFECT OF RESOLUTIO N ARRIVED AT UNDER THE MUTUAL AGREEMENT PROCEDURE (MAP) SHALL BE GIVE N BY THE AO WITHIN THE STIPULATED PERIOD, IF THE ASSESSEE GIVES HIS ACCEPTANCE TO THE RESOLUTION TAKEN UNDER MUTUAL AGR EEMENT PROCEDURE; AND WITHDRAWS HIS APPEAL, IF ANY, PENDIN G ON THE ISSUE WHICH WAS THE SUBJECT MATTER FOR ADJUDICATION UNDER MUTUAL AGREEMENT PROCEDURE. NITTY-GRITTY OF RULE 44H(4) IS THAT WHEN A RESOLUTION HAS BEEN MADE ON AN ISSUE UNDER THE MAP, WHICH THE ASSESSEE HAS ACCEPTED, THE SAME ATTAINS FINALITY. THE ASSES SEE, AS A PRE-CONDITION, HAS TO NECESSARILY WITHDRAW ITS APPEAL TO THE E XTENT OF THE SUBJECT MATTER FOR ADJUDICATION UNDER THE MAP. 15. ADVERTING TO THE INSTANT RESOLUTION UNDER THE MAP FOR THE YEAR UNDER CONSIDERATION, WE FIND THAT THE SUBJECT MATTER IS RESTRICTED TO THE INTERNATIONAL TRANSACTION OF IMPORT OF RAW MATE RIAL ITA NO.621/PUN/2014 YAZAKI INDIA PRIVATE LIMITED 14 ETC. FROM YCJ. AT THE COST OF REPETITION, WE STATE THAT THE ASSESSEE REPORTED ONE INTERNATIONAL TRANSACTION OF IMPORT WIRES, TERM INALS, CONNECTIONS, TAPS AND TUBES, SPARES AND OTHER RAW MATERIA LS WITH TRANSACTED VALUE OF RS.73,10,21,926/-. THIS TRANSACTION C OVERS IMPORTS FROM YCJ AND NON-YCJ AES. THE ASSESSEE AND THE TPO DETERMINED PLI FROM SUCH IMPORT TRANSACTION IN A COMBINED MANNER. IT MEANS THAT SUCH CUMULATIVE PROFIT (LOSS) MARGIN IN THE PLI ENCOMPASSES PROFIT (LOSS) NOT ONLY FROM IMPORTS TRA NSACTIONS WITH YCJ BUT ALSO NON-YCJ AES. IN FACT, BOTH SEPARATE PROF ITS (LOSSES) SUBSUMED INTO THE OVERALL PROFIT (LOSS) AND AS SU CH SEPARATE PROFITS (LOSSES) ARISING ON ACCOUNT OF IMPORT FROM YCJ A ND NON- YCJ AES LOST THEIR SEPARATE IDENTITIES. TO SAY THE LEAST, IT IS NOT EVEN THE CASE OF THE ASSESSEE THAT A SEPARATE PLI IN RESPE CT OF IMPORTS FROM NON-YCJ AES IS AVAILABLE. THE AO MADE TRANS FER PRICING ADJUSTMENT OF RS.17.04 CRORE IN RESPECT OF THE INTE RNATIONAL TRANSACTION OF IMPORT OF RAW MATERIALS BOTH FROM YCJ AND NON-YCJ AES. SUCH A TRANSFER PRICING ADJUSTMENT WAS MADE BY CONSID ERING THE ASSESSEES PLI FROM THIS CONSOLIDATED INTERNATIONAL TRANSACTIO N AT (-) 3.78% AND THAT OF COMPARABLES AT 3.74%. THE COMP ETENT AUTHORITY, IN ITS ORDER, HAS ALLOWED RELIEF OF RS.2.74 CRORE IN RESPECT OF TRANSACTION WITH YCJ. THE LD. AR HAS PLACED ON RECORD ITA NO.621/PUN/2014 YAZAKI INDIA PRIVATE LIMITED 15 WORKING OF RELIEF AS PER THE MAP. THERE ARE 3 CHARTS, WH ICH HAVE BEEN DRAWN IN THIS REGARD. CHART B, WHICH IS INSTANTLY RELEVAN T FOR OUR PURPOSE, IS REPRODUCED HERE AS UNDER : PARTICULARS DATA FLAG AMOUNT IN INR APPLYING MAP RESOLUTION OP/OR (%) AS PER FINAL AO ORDER -378% COMPARABLES MARGIN % AS AGREED IN MAP (REFER NOTE 1 BELOW) 1.57% REDUCED TP ADJUSTMENT POST MAP G 12,12,70,858 BREAK-UP OF THE TP ADJUSTMENT INTO JAPAN AE & OTHER AE ADJUSTMENT PERTAINING TO JAPAN AE TRANSACTIONS ACCEPTED IN MAP H = (G*A)/C 7,03,37,097 TP ADJUSTMENT CORRESPONDING TO TRANSACTIONS WITH OTHER AES I=G-H 5,09,33,761 12,12,70,858 16. IT CAN BE SEEN FROM THE ABOVE CHART OF WORKING OF RELIEF AND THE REMAINING TRANSFER PRICING ADJUSTMENT AS PER MAP THAT THE ASSESSEES OWN PLI OF OP/SALES AS COMPUTED BY THE TPO AT ( -) 3.78% HAS BEEN ACCEPTED AS SUCH. RELIEF HAS BEEN GIVE N IN THE MARGIN OF COMPARABLES, WHICH THE TPO TOOK AT 3.74% AND THE COMPETENT AUTHORITIES MUTUALLY AGREED TO REDUCE IT TO 1.57%. 17. THE QUESTION WHICH LOOMS LARGE BEFORE US IS -- CAN THE ASSESSEE ASSAIL ITS PLI QUA INTERNATIONAL TRANSACTION OF IMPORT OF ITA NO.621/PUN/2014 YAZAKI INDIA PRIVATE LIMITED 16 RAW MATERIALS ETC. FROM NON-YCJ AES, WHEN THE SAME PLI H AS BEEN ACCEPTED IN MAP PROCEEDINGS? EXERCISE OF AN ALP DETERMINATION UNDER THE TNMM INVOLVES TWO BROADER COMPONENTS, VIZ., PLI OF THE ASSESSEE AND AVERAGE PLI OF THE COMPARABLES. IN THE INSTANT CASE, THE TPO DETERMINED PLI OF THE ASSESSEE AT (-) 3.78% AND THAT OF THE COMPARABLES AT 3.74%. IN THE MAP RESOLUTION, WHEREA S THE PLI OF THE ASSESSEE HAS BEEN ACCEPTED AT THE SAME LEVEL, THE PLI OF THE COMPARABLES HAS BEEN ALTERED. IT DECIPHERS THAT THE ASS ESSEE ACCEPTED ITS OWN PLI DETERMINATION AT (-)3.78%, WHICH IS UNDISPUTEDLY FROM THE COMMON INTERNATIONAL TRANSACTION OF IMPOR T OF RAW MATERIAL ETC. BOTH FROM YCJ AND NON-YCJ AES. A T NO STAGE DID THE ASSESSEE EVER CHALLENGE BY URGING TO SPLIT THIS SINGLE TRANSACTION OF IMPORT OF RAW MATERIALS AND ITS CONSEQUENTIAL P LI INTO TWO SEPARATE TRANSACTIONS, ONE WITH YCJ AND OTHER WITH NO N- YCJ AES. ONCE THE PLI DETERMINED BY THE TPO, WHICH BEAR S THE COMBINED PROFIT (LOSS) FROM TRANSACTIONS BOTH WITH YCJ AND NON- YCJ AES HAS BEEN ACCEPTED BY THE ASSESSEE UNDER THE M AP RESOLUTION EVEN THOUGH IN RESPECT OF TRANSACTIONS WITH YCJ, THE RE CAN BE NO QUESTION OF NOW MAKING ANY ALTERNATIONS TO SUCH A COMBINED PLI IN SO FAR AS THE TRANSACTIONS WITH NON-YCJ AES ARE CONCERNED. IF WE PROCEED TO MAKE ANY ALTERNATION TO THE PL I IN ITA NO.621/PUN/2014 YAZAKI INDIA PRIVATE LIMITED 17 RESPECT OF TRANSACTION OF IMPORT FROM NON-YCJ AES AS SUG GESTED BY THE LD. AR, IT WOULD FRUSTRATE THE ASSESSEES PLI IN RES PECT OF TRANSACTION WITH YCJ ALSO, WHICH IS NOT PERMISSIBLE AT THIS STAGE A S THE SAME HAS BEEN ACCEPTED BY THE ASSESSEE IN THE MAP RE SOLUTION. SINCE THERE IS A COMMON COMPUTATION AND DETERMINATION OF PLI UNDER TNMM FOR ALL THE TRANSACTIONS OF IMPORT OF RAW MATERIA LS, NOW NO CHALLENGE CAN BE MADE TO THE CORRECTNESS OF SUCH PLI FOR THE INTERNATIONAL TRANSACTION OF IMPORT OF RAW MATERIALS ETC. FR OM NON-YCJ AES. THE POSITION WOULD HAVE BEEN DIFFERENT IF THE ALP DETERMINATION OF THE TRANSACTION OF IMPORT OF RAW MATERIALS ETC. FROM YCJ HAD BEEN DONE SEPARATELY FROM THE TRANSACTION OF IMPORT OF RAW MATERIALS ETC. FROM NON-YCJ AES, IN WHICH CASE BOTH THE PROFITS WOULD HAVE BEEN INDEPENDENT OF EACH OTHER AND NON E BEARING THE EFFECT OF THE OTHER. IN VIEW OF THE FOREGOING D ISCUSSION, WE JETTISON THE CONTENTION RAISED ON BEHALF OF THE ASSESSEE. 18. NOW WE TAKE UP THE SECOND ARGUMENT OF THE ASSESSEE AGAINST THE EXCLUSION OF FCI TECHNOLOGY SERVICE LTD. FROM THE LIST OF COMPARABLES BY THE TPO. BEFORE TAKING UP THIS ISSUE, WE WA NT TO REITERATE THAT THE TPO COMPUTED PLI OF THE ASSESSEE AND COMPARABLES AT PARTICULAR PERCENTAGES. IN MAP PROCEEDINGS, THE PLI OF THE ASSESSEE HAS BEEN ACCEPTED BY THE COMPETENT A UTHORITIES ITA NO.621/PUN/2014 YAZAKI INDIA PRIVATE LIMITED 18 AND THE ASSESSEE AS WELL. HOWEVER, THE PLI OF THE COMPA RABLES DETERMINED BY THE TPO HAS BEEN REDUCED FROM 3.74% TO 1.5 7%. IT MEANS THAT, WHEREAS THE PLI DETERMINATION OF THE ASSESSEE BY THE TPO ATTAINED FINALITY BY VIRTUE OF MAP PROCEEDINGS, THE PLI DETERMINATION OF THE COMPARABLES BY THE TPO HAS BEEN JEOPARDIZED. WE HAVE HELD SUPRA THAT THE PLI DETERMINATION OF THE ASSESSEE BY THE TPO IS NOT OPEN TO CHALLENGE, WHICH IS SO F OR HAVING NOT BEEN ALTERED IN THE MAP PROCEEDINGS AND ACCEPTE D BY THE ASSESSEE AS SUCH. HOWEVER, THIS VIEW DOES NOT HOLD GOOD IN RESPECT OF THE PLI DETERMINATION OF THE COMPARABLES BY THE T PO QUA THE INTERNATIONAL TRANSACTION OF IMPORT FROM NON-YCJ AES. I N THAT VIEW OF THE MATTER, IT IS HELD THAT THE ASSESSEE CAN VALIDLY ASSAIL ANY PART OF THE DETERMINATION OF THE ALP OF THE COMPARABLES IN RESPECT OF TRANSACTION OF IMPORT OF RAW MATERIALS ETC. FROM NON-YCJ AES. 19. NOW WE TAKE UP THE ARGUMENT OF THE ASSESSEE FOR INCLU SION OF FCI TECHNOLOGY SERVICES LTD. IN THE LIST OF COMPARABLES, WHIC H WAS A COMPARABLE CHOSEN BY THE ASSESSEE. THE TPO DIREC TED TO EXCLUDE IT ON THE GROUND OF A PERSISTENT LOSS MAKING COMPAN Y. HE NOTICED ON PAGE 14 OF HIS ORDER THAT FOR THE A.Y.2006-07, THIS COMPANY INCURRED LOSS OF (-) 0.28%; FOR THE A.Y. 2007-0 8 THOUGH ITA NO.621/PUN/2014 YAZAKI INDIA PRIVATE LIMITED 19 THE ASSESSEE HAD CLAIMED THAT THIS COMPANY HAD EARNED PR OFIT OF 5.09%, BUT THE PLI MARGIN OF THIS COMPANY WAS (-) 7.76%; F OR THE A.Y. 2008-09 THIS COMPANY INCURRED LOSS OF (-) 22.59% I N CONNECTORS SEGMENT; AND FOR THE A.Y. 2009-10, THIS COMPAN Y AGAIN INCURRED LOSS OF (-) 40.97% IN CONNECTORS SEGMENT. IN THE LIGHT OF SUCH FACTUAL POSITION, THIS COMPANY WAS HELD TO BE A PERSISTENT LOSS MAKING COMPANY AND HENCE NOT COMPARABLE. THE ASSESSEE IS AGGRIEVED BY EXCLUSION OF THIS COMPANY FROM TH E LIST OF COMPARABLES. 20. HAVING HEARD BOTH THE SIDES AND GONE THROUGH THE RELEV ANT MATERIAL ON RECORD, IT IS SEEN THAT THE TPO DID NOT DISPUTE THE FUNCTIONAL SIMILARITY OF THIS COMPANY WITH THE ASSESSEE COMPA NY. HE HOWEVER, DIRECTED TO REMOVE IT FROM THE LIST OF COMPARAB LES ONLY ON THE GROUND OF PERSISTENT LOSSES. THE LD. AR STATED TH AT THE TPO WENT WRONG IN NOTING SOME FIGURES OF LOSSES. WE HAVE GONE THROUGH THE MARGINS COMPUTATION OF FCI TECHNOLOGY SERVICES LTD., A COPY OF WHICH HAS BEEN PLACED AT PAGE 442 OF THE PAPE R BOOK FOR THE YEAR UNDER CONSIDERATION AND PART OF WHICH IS AVAILABLE AT PAGE 484 OF THE PAPER BOOK FOR THE IMMEDIATELY PRECEDING ASSES SMENT YEAR, I.E. 2008-09. IT IS APPARENT THAT FOR THE A.Y. 2006 -07, THIS COMPANY INCURRED LOSS AT (-) 0.28% WHICH HAS BEEN CORRE CTLY ITA NO.621/PUN/2014 YAZAKI INDIA PRIVATE LIMITED 20 RECORDED BY THE TPO. THE DISPUTE IS ABOUT RECORDING LOSS F OR THE A.Y. 2007-08. THE TPO HAS NOTICED THAT THE PLI MARGIN OF TH IS COMPANY STOOD AT (-) 7.76%. WE HAVE GONE THROUGH PAGE 484 OF THE PAPER BOOK FOR THE A.Y. 2008-09, WHICH SHOWS THAT AS AGAINST THE PLI (-) 7.76% NOTED BY THE TPO, THE CORRECT PLI IS 5.0 8%. INADVERTENTLY, THE TPO CONSIDERED THE FIGURE WHICH FALLS UNDER THE NEXT COLUMN RELEVANT FOR THE A.Y. 2008-09. THUS, IT IS OV ERT THAT FOR A.Y. 2007-08 THIS COMPANY HAD PLI OF 5.08%. FOR THE A.Y. 2008-09, THERE WAS LOSS OF (-) 22.60% IN THE CONNECTORS SEGMENT WHICH WAS FOLLOWED BY LOSS OF (-) 40.97% FOR THE YEAR UN DER CONSIDERATION. 21. THE HONBLE JURISDICTIONAL HIGH COURT IN CIT VS. GOLDMAN SACHS (INDIA) SECURITIES (P) LTD. (2016) 290 CTR 236 (BOM. ) CONSIDERED A SIMILAR ISSUE OF PERSISTENT LOSS MAKING COMPANIE S. IN THAT CASE, THE TPO EXCLUDED CAPITAL TRUST LTD. ON THE GROUND OF PERSISTENT LOSS MAKING COMPANY. THE TRIBUNAL INCLUDED THIS COMPANY BY NOTICING THAT IT WAS NOT A PERSISTENT LOSS MAKING COMPANY AS FOR THE A.Y. 2005-06 IT MADE PROFIT ALTHOUGH IT W AS LOSS FOR SUBSEQUENT TWO YEARS, NAMELY, A.Y. 2006-07 AN D 2007-08. CONSIDERING THE FACTUAL POSITION OBTAINING IN THE INSTANT CASE, IT IS SEEN THAT THOUGH FCI TECHNOLOGY SERVICES LTD. SUFFERED LOSS FOR ITA NO.621/PUN/2014 YAZAKI INDIA PRIVATE LIMITED 21 THE A.Y. 2008-09 AND THE YEAR UNDER CONSIDERATION BUT, IN FACT, THERE WAS PROFIT FOR THE A.Y. 2007-08 AT 5.08%. AS THIS C OMPANY EARNED PROFIT OF 5.08% FOR THE A.Y. 2007-08, IT CEASES TO BE A PERSISTENT LOSS MAKING COMPANY IN SO FAR AS THE A.Y. 2009- 10 IS CONCERNED, SINCE ONE OF THE THREE YEARS IS IN PROFIT THOUGH THE OTHER TWO YEARS ARE IN LOSS. 22. THE LD. DR INVITED OUR ATTENTION TOWARDS THE DIRECTION GIVEN BY THE DRP ON PAGE 12 IN WHICH IT HAS RETURNED A CATEGORIC AL FINDING THAT FCI TECHNOLOGY SERVICES LTD. STARTED MANUFACTURING CONNECTORS DURING THE A.Y. 2008-09 AND THERE WAS NO MANUFACTURING OF CONNECTORS DURING THE A.Y. 2007-08, FOR WHICH THE ASSESSEE IS CLAIMING THAT THIS COMPANY HAS POSITIVE PLI. 23. WE HAVE GONE THROUGH THE ANNUAL REPORT OF THIS CO MPANY RELEVANT FOR THE A.YRS. 2009-10 AND 2008-09. PAGE 467 OF THE PAPER BOOK FOR THE ASSESSMENT YEAR UNDER CONSIDERATION GIVES DETAILS OF STOCK, PRODUCTION AND SALES FOR THE YEAR ENDING 31-12-2007 WHICH HAS OPENING STOCK OF CONNECTORS AS WE LL. SIMILAR IS THE POSITION FOR THE PRECEDING YEAR AS WELL, WHICH DEPICTS THAT THERE WAS OPENING STOCK OF CONNECTORS. IN THAT VIEW OF THE MATTER, IT BECOMES EVIDENT THAT THIS COMPANY WAS ALREADY INTO ITA NO.621/PUN/2014 YAZAKI INDIA PRIVATE LIMITED 22 MANUFACTURING OF CONNECTORS, WHICH PRODUCT HAS BEEN CONS IDERED AS SIMILAR BY THE DRP. EX CONSEQUENTI, THE RELEVANT CONTRARY FINDING RECORDED BY THE DRP ABOUT THAT COMPANY NOT ENGAGED IN MANUFACTURING OF CONNECTORS DURING THE A.Y. 2007-08 IS, THEREFORE, NOT CORRECT. AS FCI TECHNOLOGY SERVICES LTD. IS NOT A PERSIS TENT LOSS MAKING COMPANY AND FURTHER THE FUNCTIONAL SIMILARITY HAS NOT BEEN DISPUTED BY THE TPO, WE ORDER TO INCLUDE THIS COMPANY IN THE LIST OF COMPARABLES. 24. LAST GROUND TAKEN BY THE ASSESSEE IS AGAINST MAKING THE TRANSFER PRICING ADJUSTMENT IN RESPECT OF ALL THE TRANSACTIONS INCLUDING NON-INTERNATIONAL TRANSACTIONS. 25. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND GOING THROUGH THE RELEVANT MATERIAL ON RECORD, WE FIND THAT NO EXCEPTION CA N BE TAKEN TO THE ARGUMENT OF THE LD. AR THAT THE TRANSFER PRICING ADDITION SHOULD BE RESTRICTED ONLY TO THE INTERNATIONAL TRANSACTION S AND NOT THE NON-INTERNATIONAL TRANSACTIONS OF THE ASSESSEE. F IRST SUB-SECTION OF SECTION 92 OF THE ACT, WHICH IS THE FIRST SECTION OF THE CHAPTER X, PROVIDES IN UNAMBIGUOUS TERMS THAT : `ANY INCOME ARISING FROM AN INTERNATIONAL TRANSACTION SHALL BE COMPUTED HAVING REGARD TO THE ARMS LENGTH PRICE. THE CHAPTER EXTENDS ITS ITA NO.621/PUN/2014 YAZAKI INDIA PRIVATE LIMITED 23 APPLICATION ONLY TO THE INTERNATIONAL TRANSACTIONS, WHICH TERM HAS BEEN DEFINED IN SECTION 92B TO MEAN : `A TRANSACTION BETWEEN TWO OR MORE ASSOCIATED ENTERPRISES . THUS IT IS PATENT THAT THE TRANSFER PRICING PROVISIONS APPLY ONLY TO THE TRANSACTIONS BETW EEN THE ASSOCIATED ENTERPRISES AND NOT TO UNRELATED OR NON-ASSOC IATED ENTERPRISES. THE HONBLE JURISDICTIONAL HIGH COURT IN CIT VS. TARA JEWELS EXPORTS PVT. LTD. (2015) 94 CCH 032-MUMHC (BOM): (2016) 381 ITR 404 (BOM) HAS HELD THAT SECTIONS 92A AND 92B REQUIRE TRANSFER PRICING ADJUSTMENT TO BE DONE ONLY IN RESP ECT OF THE TRANSACTIONS ENTERED INTO BETWEEN THE ASSESSEE WITH ITS AES AND NOT WITH THE NON-AES. SIMILAR VIEW HAS BEEN REITERATED AGAIN BY TH E HONBLE JURISDICTIONAL HIGH COURT IN CIT VS. THYSSEN KRUPP INDUSTRIES INDIA PVT. LTD. (2016) 381 ITR 413 (BOM.). AS THE VIEW ADOPTED BY THE AO DOES NOT ACCORD WITH THAT OF THE HONBLE JURISDICTIONAL HIGH COURT, WE ARE DISINCLINED TO ACCEPT THE SAME. 26. WE, THEREFORE, SET ASIDE THE IMPUGNED ORDER TO THI S EXTENT AND DIRECT THAT THE TRANSFER PRICING ADDITION SHOULD BE RESTRICTED TO THE INTERNATIONAL TRANSACTIONS AND NOT THE NON-INTERNATIONAL TRANSACTIONS. THIS GROUND IS THUS ALLOWED. ITA NO.621/PUN/2014 YAZAKI INDIA PRIVATE LIMITED 24 27. TO SUM UP, WE SET ASIDE THE IMPUGNED ORDER AND REMIT THE MATTER TO THE AO/TPO FOR REWORKING OUT THE ALP OF THE INTERNATIONAL TRANSACTION OF IMPORT WIRES, TERMINALS, CONNECTIO NS, TAPS AND TUBES, SPARES AND OTHER RAW MATERIALS AFRESH IN ACCORDANCE WITH OUR ABOVE OBSERVATIONS AND DIRECTIONS. 28. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH JULY, 2019. SD/- SD/- (PARTHA SARATHI CHAUDHURY) (R.S.SYAL) JUDICIAL MEMBER VI CE PRESIDENT PUNE; DATED : 11 TH JULY, 2019 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. THE CIT(A)-13, PUNE 4. 5. 6. THE CIT/IT/TP, PUNE , , / DR C, ITAT, PUNE; / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR P RIVATE SECRETARY , / ITAT, PUNE ITA NO.621/PUN/2014 YAZAKI INDIA PRIVATE LIMITED 25 DATE 1. DRAFT DICTATED ON 08-07-2019 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 10-07-2019 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. DATE OF UPLOADING ORDER SR.PS 8. FILE SENT TO THE BENCH CLERK SR.PS 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK 10. DATE ON WHICH FILE GOES TO THE A.R. 11. DATE OF DISPATCH OF ORDER. *