Rule 29 of Income-tax Rules, 1962— Transfer pricing— The assessee, a resident company, is stated to be engaged in the business of minerals blending, warehousing and trading of chromite sand, bentonite and allied products. As stated by the TPO, to supplement its business the assessee imports chromite sand from its group company in South Africa and sold to customers in India. As stated, the assessee also imports bentonite and related minerals from its AE in USA and Australia for further processing/blending with other minerals/ingredient to be utilized in the manufacturing activity carried on by the assessee. It was stated that the assessee was a subsidiary of Amcol, Mauritius, which is ultimately owned by Minerals Technologies Inc., USA. During the year under consideration, the assessee entered into various international transactions, such as, procurement of raw materials from AEs in Australia and USA, purchase of goods from AE in South Africa for the purpose of trading, purchase of fixed assets from the AE in Europe, royalty for use of intangible assets, management service, issue of equity shares, etc. In the TPO report, the assessee benchmarked all these transactions by applying Transactional Net Margin Method (TNMM) at entity level. the TPO was not satisfied with assessee's benchmarking insofar as it relates to purchases of raw materials from the AEs. The adjustment suggested by the TPO was added back to the income of the assessee. Against the draft assessment order, the assessee raised objections before DRP. However, DRP did not find merit in the objections of the assessee. sufficient opportunity was given to the assessee at different stages, the assessee has not furnished the revised TP study report at any earlier stage. However, restore the issue to the AO. Held that the assessee must be afforded a reasonable opportunity of hearing before deciding the issue.
Tribunal observed that the assessee has also filed additional grounds challenging the initiation of penalty proceedings under ss. 271G and 271AA of the Act. and held that at this stage the grounds raised by the assessee challenged the initiation of penalty proceedings were premature as no orders have been passed imposing penalty. It was always open to the assessee to raise objections, if any, against imposition of penalty only in course of such proceeding and before the concerned authority. These grounds were dismissed. Appeal was partly allowed for statistical purposes. --- AMCOL MINERALS & MATERIALS INDIA (P) LTD. vs. ASSTT. CIT.[2020] 23 ITCD Online 150 (MUM)