Renault Nissan Automotive India Private Limited, Kancheepuram V. DCIT, Corpoate Circle-5(1), CHENNAI

ITTPA 12/CHNY/2020

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 1123 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 8 month(s) 22 day(s)
• Appeal Type: Income Tax (Transfer Pricing) Appeal
• Pronouncement Date: 11-10-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: D
• Next Hearing Date: 25-09-2022
• Assessment Year: 2015-2016
• Appeal Filed On: 19-01-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Transfer pricing; Rectification of order; TDS
• Section: 143(3); 92CA

Judgement Text

आयकर अपीलीय अिधकरण ‘डी’ ायपीठ चे ई म । IN THE INCOME TAX APPELLATE TRIBUNAL ‘D’ BENCH, CHENNAI माननीय,ीमहावीरिसंह, उपा23एवं माननीय,ी मनोज कु मार अ8वाल ,लेखा सद; के सम3। BEFORE HON’BLE SHRI MAHAVIR SINGH, VICE PRESIDENTAND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM आयकरअपीलसं./IT(TP)A No.12/Chny/2020 (िनधाCरणवषC / Assessment Year: 2015-16) Renault Nissan Automotive India Pvt. Ltd. Plot No.1, SIPCOT Industrial Estate Mattur Post, Oragadam, Sriperumbudur, Kancheepuram District, Chennai – 602 105. बनाम/ V s . DCIT Corporate Circle -5(1), Chennai. थायीलेखासं. /जीआइआरसं. /P AN / G I R N o . AAD C R- 7 9 6 5 - B (अ पीलाथ /Appellant) : ( थ / Respondent) अपीलाथ कीओरसे/ Appellant by : Shri Sriram Seshadri (CA) – Ld. AR थ कीओरसे/Respondent by : Ms. Ann L Kapthuama (CIT) –Ld. DR सुनवाईकीतारीख/D a t e of He a r i n g : 26-09-2022 घोषणाकीतारीख /Date of Pronouncement : 12-10-2022 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by assessee for Assessment Year (AY) 2015-16 arises out of final assessment order passed by learned Assessing Officer on 21.11.2019 u/s 143(3) r.w.s. 92CA r.w.s. 144C(13) pursuant to the directions of learned Dispute Resolution Panel-2, Bengaluru (DRP) u/s 144C(5) dated 27.09.2019. The learned Transfer Pricing Officer-2 (TPO) has passed a rectification order u/s 92CA(5) r.w.s. 154 IT(TP)A No.12/Chny/2020 - 2 - on 05.12.2019 wherein the Transfer Pricing Adjustment of Rs.27.39 Crores has been reduced to Rs.2.73 Crores since the downward adjustment was required for 27.39 million and not for Rs.27.39 Crores. 2. The assessee has filed concise grounds of appeal on 12.05.2022 wherein the assessee primarily seek benefit of tolerance range as given in second proviso to Sec.92C(2) of the Act. To support the same, Ld. AR placed on record relevant papers and computations. Having heard rival submissions and after due consideration of relevant material on record, the appeal is disposed-off as under. 3.1 The assessee is a Joint Venture entity between Nissan Motor Ltd. (NML) of Japan which holds 70% control and Renault group BV, Netherlands which holds remaining 30% control. The assessee act as an integrated manufacturing facility and manufactures both Nissan and Renault brand car as per market requirements. 3.2 The assessee entered into purchase transactions with Associated Enterprises (AE) which were subjected to computation of Arm’s Length Price (ALP) under Transfer Pricing mechanism. The assessee has computed segmental margins for the purpose of benchmarking. The Nissan segment Transfer Pricing Adjustment has already been settled by the assessee under Advance Pricing Agreement (APA) and the same has been given effect to. However, the dispute in the present appeal is with respect to Transfer Pricing adjustment of Renault Segment. The Ld. TPO, on aggregate basis, held that 3% margin on Value Added Expenses and a routine return of 8.35% on capital employed would be the Arm’s Length Profit and accordingly, an adjustment of Rs.200.283 Crores was proposed by Ld. TPO in order IT(TP)A No.12/Chny/2020 - 3 - dated 31.10.2018. Thereafter, the adjustment was revised for Nissan Segment in terms of APA as secured by the assessee. 3.3 The transactions with Renault Group aggregated to Rs.1788.68 Crores which are in the nature of purchase of production parts, consumables, fixed assets, royalty, testing charges etc. (page 16 of DRP directions dated 27.09.2019) for which downward adjustment of Rs.27.39 million INR was proposed. The Ld. DRP confirmed the same. The adjustment has finally been given effect to in Ld. TPO’s rectification order dated 05.12.2019 wherein the adjustment has been reduced to Rs.2.73 Crores which is approx. 0.15% of international transactions of Renault Group segment. 3.4 We find that second proviso to Sec. 92C(2) as applicable to AY 2015-16, provides tolerance range of 3%. If the Arm’s Length Price fall within this range, no adjustment is to be made.It could be seen that the variation as proposed by revenue in assessee’s case is much lower than this range and therefore, the adjustment as finally determined by Ld. TPO is not sustainable in law. We order so. The corresponding ground stand allowed. 3.5 The Ld. AR has also made another argument that the Transfer Pricing adjustment should be restricted to the proportion of international transactions undertaken in the said segment. Since, we are convinced with the first argument, this plea has been rendered academic in nature and not dealt with. 3.6 Another grievance of the assessee in the appeal is short grant of TDS credit. For the same, it would suffice on our part to direct Ld. AO to grant correct TDS credit in accordance with law. The assessee is IT(TP)A No.12/Chny/2020 - 4 - directed to file requisite details. This ground stand allowed for statistical purposes. 4. The appeal stands partly allowed in terms of our above order. Order pronounced on 12 th October, 2022. Sd/- (MAHAVIR SINGH) उपा23 /VICE PRESIDENT Sd/- (MANOJ KUMAR AGGARWAL) लेखासद; /ACCOUNTANT MEMBER चे+ई/ Chennai; िदनांक/ Dated : 12-10-2022 JPV JPVJPV JPV आदेशकीWितिलिपअ8ेिषत/ Copy of the Order forwarded to : 1. अपीलाथ /Appellant 2. यथ /Respondent 3. आयकरआयु (अपील)/CIT(A)4. आयकरआयु /CIT 5. िवभागीय ितिनिध/DR6. गाड फाईल/GF