Tribunal held that, where assessee imported finished goods from its Associated Enterprises (AEs) and resold same to non-AEs without any value addition, RPM was most appropriate method in respect of distribution activities undertaken by assessee. Foreign exchange gain/loss arising out of revenue transactions is required to be considered as an item of operating revenue/cost, both for assessee as well as comparables. As regards imported finished goods from its Associated enterprises (AEs) and resold same to non-AEs without any value addition. Granting adjustment on account of import duty paid because it incurred higher import duty in comparison with comparable companies. Whether import duty has been paid or not or paid to lower extent by comparables cannot have any effect over computation of gross profit margin of comparables, no adjustment on account of separate items resulting into computation of gross profit can be permitted. (AY. 2011-12)
Fresenius Kabi India (P.) Ltd. v. ACIT (2018) 172 DTR 129 / 196 TTJ 1023 / 68 ITR 27 (SN)/ 100 taxmann.com 134 (Pune)(Trib.)
S. 92C : Transfer pricing-Arms’ length price–Resale of goods–RPM method is most appropriate – Foreign exchange gain/loss arising out of revenue transactions is required to be considered as an item of operating revenue/cost, both for assessee as well as comparables -Granting adjustment on account of import duty paid because it incurred higher import duty in comparison with comparable companies – No adjustment on account of separate items resulting into computation of gross profit can be permitted.