Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2010 (8) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2010 (8) TMI 749 - ITAT MUMBAICondonation petition - HELD THAT:- There is a delay of 489 days in filing of the CO by the assessee. After considering the reasons given in the condonation petition, the affidavit and in the view of the principles laid down in the case N. Balkrishnan V.M. Krishnamurthy [1998 (9) TMI 602 - SUPREME COURT], Vasu & Co. v. State of Kerala [2001 (6) TMI 796 - KERALA HIGH COURT] the delay in filing of the CO is condoned, as the assessee is not otherwise gaining more as he can also take shelter of Rule 27. Adjustment (international transaction) in the ALP - comparable cases - Assessee has purchased goods from and sold to its AEs and has adopted the Cost Plus Method. Referring to provisions of section 92C(2), he submitted that there is no scope for the CIT(A) to adopt weighted average method since the Act provides only simple arithmetic mean. HELD THAT:- we find the AO made the addition on the basis of the order of the TPO who had selected four parties as comparable cases for the T.P. study. We find out of the four companies, namely, Moon Diamonds (India) Ltd., Deep Diamonds (India) Ltd., Shantivijay Jewels Ltd. and Sovereign Diamonds Ltd., the CIT(A) considered the first three parties as comparables and he accepted the contention of the assessee that Sovereign Diamonds Ltd. cannot be compared because it is engaged in the business of diamonds and the results shown by it i.e., G.P. of 53.81 per cent on cost is beyond the norms and standards of the industry. In our opinion, Sovereign Diamonds Ltd. showing a gross profit margin of 53.81 per cent cannot be considered as a comparable which shows abnormal profit which is beyond the norms and standards of the industry. Similarly, in view of the wide variations in various parameters of the comparables, weighted average, in our opinion, should be adopted as against simple arithmetic average adopted by the AO. We, therefore, do not find any infirmity in the order of the CIT(A) to this extent and the grounds raised by the revenue have to be dismissed. Applicability of the Board circular - CIT(A) while deciding the issue has not considered the CBDT circular according to which no adjustment to the ALP can be made where the difference in the margin is within 1 5 per cent of the price determined by the AO. HELD THAT:- It is the settled proposition of law that the Board’s circulars are binding on the Department. We find, although the CIT(A) has discussed the issue, he, however, has not given any specific finding whether the assessee’s case is covered by the Board’s circular. It is the submission of the learned DR that since this issue was not before the AO and the assessee has raised the issue before the CIT(A) for the first time who has not given any decision on this issue, therefore, the matter may be restored to the CIT(A) for adjudication on this issue. However, considering the totality of the facts of the case, we are of the considered opinion, that this issue i.e., applicability of the Board circular No. 12/2001 to the facts of the case of the assessee should be restored to the file of the AO since it requires certain calculations and verifications. We, therefore, restore the matter to the file of the AO for fresh adjudication of the issue. The grounds raised by the revenue on this issue are dismissed and the CO filed by the assessee is allowed for statistical purposes.
|