Denso India Pvt Ltd vs Dy. CIT
The assessee M/s Denso India Limited is engaged in the business of manufacturing and sale of wide range of automobile components and other auto electrical components etc. Denso Corporation, Japan an automobile component manufacturer holds 47.93% of share capital in Denso India. TPO held that the transaction of purchase of fixed assets has been benchmarked on an aggregate basis and the assessee did not furnish any details regarding the book value of the assets purchased.
As regards to comparables having similar FAR are to be included, the Ld. DR submitted that comparables cannot be rejected on account of Judicial view of Court on different facts and similar FAR is the criteria for including the comparable as held in case of M/s Cowi India Pvt. Ltd. Vs ACIT, Gurgaon which is in favour of the Revenue. In respect of entity level vs. Segmental level comparison, the Ld. DR relied upon the decisions wherein it is held that use of entity level margins is not appropriate and segmental data is required. As regards to objections to comparability, on account of Functional difference, the Ld. DR relied upon the decision in case of Deloitte Consulting India Pvt. Ltd. and also that of OECD guidelines which speaks of the strength of TNMM. On the issue of working capital adjustment and risk adjustment, the Ld. DR relied upon OECD Guidelines, 2010 and OECD Guidelines, 2017. The Ld. DR submitted that in the present case, the assessee failed to provide accurate, reliable, relevant and robust data to the TPO/AO. It has not provided daily or monthly averages of payables, receivables and inventory. No evidence of certainty of risk has been provided before the TPO/DRP. Hence it is not eligible for any adjustment. In result, the appeal of the assessee is partly allowed for statistical purpose.