COMMISSIONER OF INCOME TAX vs. M/S YAMAHA MOTOR INDIA (P) LTD.

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ITA/754/2015HC DelhiDLHC01248881201514 March 2016Bench: HON'BLE DR. JUSTICE S.MURALIDHAR,HON'BLE MR. JUSTICE VIBHU BAKHRU2 pages
AI SummaryDismissed

What did the High Court hold?

The Tribunal had accepted the Assessee's contention regarding RPM. The High Court noted that even if TNMM was applied, the Assessee's gross profit margin was higher for exports to its AE compared to unrelated parties, and export prices were also better. These findings of fact were not assailed by the Revenue.

What were the facts?

The Revenue appealed against an ITAT order concerning the application of the resale price method (RPM) for determining the arm's length price (ALP) of international transactions between the Assessee and its associated enterprise. The Revenue contended that RPM was incorrectly applied as the property was not resold to an unrelated enterprise.

What were the issues?

Whether the ITAT was correct in accepting the Assessee's contention regarding the application of the resale price method (RPM) for determining the arm's length price (ALP) of international transactions.

Which sections of the Income-tax Act were involved?

Rule 10B(1)(b)(i)

AI-generated summary — verify with the full judgment below

* IN THE HIGH COURT OF DELHI AT NEW DELHI 16. + ITA 737/2015 COMMISSIONER OF INCOME TAX Appellant Through Mr Rahul Chaudhary, Advocate. versus YAMAHA MOTOR INDIA (P) LTD. Respondent Through Mr Ved Jain and Mr Pranjal Srivastava, Advocates. AND 17. + ITA 754/2015 COMMISSIONER OF INCOME TAX Appellant Through Mr Rahul Chaudhary, Advocate. versus M/S YAMAHA MOTOR INDIA (P) LTD. Respondent Through Mr Ved Jain and Mr Pranjal Srivastava, Advocates. CORAM: JUSTICE S.MURALIDHAR JUSTICE VIBHU BAKHRU ORDER % 14.03.2016 1. This is an appeal by the Revenue against an order dated 29^^ October, 2014 passed by the Income Tax Appellate Tribunal (TTAT') in ITA No. 6434/Del/2012 for the Assessment Year ('AY') 2008-09. 2. The question sought to be urged by the Revenue is whether the ITAT was correct in accepting the Assessee's contention regarding the application of ITA No. 737 & 754 of 2015 Page I of 2 Digitally Signed By:AMULYA Signature Not Verified

u the resale price method ('RPM') for determining the arm's length price ('ALP') of the international transaction entered into by the Assessee with its associated enterprise ('AE'). 3. The contention is that in terms of Rule 10 B (l)(b)(i) of the Income Tax Rules 1962, the RPM can be applied if property purchased or services obtained by the Assessee from AE is resold or are provided to an unrelated enterprise. It is contended that, in much as the Assessee sought to apply the RPM to determine the ALP the ITAT erred in accepting the said plea. 4. The Court finds that the ITAT has, in the impugned order, held that even if the ALP is determined by applying the Transactional Net Margin Method ('TNMM'), the gross profit margin earned by the Assessee in respect of export of motorcycles to its AE is 15.83% as compared to 10.75% in respect of export of motorcycles to unrelated parties. It was also seen that the export price realised per motor bike in the case of Assessee was much better when compared to that realised by other companies in the same line of business. These findings of fact have not been specifically assailed by the Revenue. Consequently, the Court declines to frame a question on this issue. 5. The appeal is dismissed. S.MURALIDHAR, J VIBHUBAKHRU, J MARCH 14, 2016/pkv ITA No. 737 & 754 of 2015 Page 2 of 2

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