The Kolkata bench of the Income Tax Appellate tribunal held that as no method has been applied by the TPO or DRP to bench-mark these transactions, the issue be remitted back to TPO.
Reckitt Benckiser (India) Limited or ‘RBIL’ or ‘the company’ is a subsidiary of Reckitt Benckiser Plc., UK. RBIL is engaged in the business of manufacturing and trading of FMCG products. RBIL manufactures and distributes various brands of household products, and over the counter pharmaceutical products.
In the course of transfer pricing assessment, Transfer Pricing Officer (TPO) dealt with various transactions between the assessee and its Associated Enterprises (AEs) and made adjustments, resulting into increase of the total income assessed. Assessee raised its objection before the DRP who had given its directions which were incorporated in the assessment completed by the AO for which the assessee is in appeal before the Tribunal.
In the Transfer pricing assessment, TPO rejected certain comparables selected by the assessee owing to difference in functions, assets, risk (FAR analysis). Assessee raised the objections and submitted that comparables taken by the TPO are functionally not comparable. TPO rejected the objections raised by the assessee. Counsel referred to the comparability analysis made for the comparables selected by the assessee by taking into account the correct functionality of the comparables for which detailed charts are placed on record.
Considering the facts, the two member bench consisting of Rajpal Yadav(vice president) and Girish Agrawal (Accountant member) remitted the issue back to the file of TPO to adjudicate upon this issue by taking into consideration the evidence placed on record by the assessee. Assessee is at liberty to furnish any further details to substantiate its claim. Thus the appeal was allowed.
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