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2013 (3) TMI 666 - ITAT HYDERABADDetermination of appropriate method and amount of ALP - rejection of comparables offered by the assessee - Addition of management fees to TP adjustments - Held that:- CUP method is not separately applicable for management fee transactions - TNMM applied on the enterprise level is a most appropriate method - the revised set of ten comparables submitted by the assessee in reply to the show-cause notice is the correct set to be used for comparability analysis - directed to TPO to adopt the ten comparables while computing the comparable margins to arrive at the ALP for the TNMM Held that:- the management services fee was paid to the AE in connection with setting up of a new factory - the expenditure cannot be considered as operating expenses - does not constitute operational expenses hence same should be excluded while computing the operating profits of the assessee - directed to make no transfer pricing adjustment with respect to management fees and also recompute PLI by excluding the management fees Whether sale of scrap considered as operating income - Held that:- The scrap material has come from the core manufacturing activity of the assessee - Hence it needs to form part of the operational income - recompute the margin of the assessee by including sale of scrap as operating income - Decided in favor of assessee Disallowing the benefit of range of +/-5% while determining the ALP - Held that:- Assessee shall not be entitled to exercise its option of +/-5% if the variation between the arithmetical mean and the price at which such transaction has actually been undertaken exceeds 5 per cent of the arithmetical mean - Decided against assessee Disallowing the provision of agency commission u/s 37 - Held that:- This commission payment accrues to the assessee company on incidence of sale and deferment of the payment of agency commission does not render the commission to be contingent in nature - AO Is directed to verify this aspect as to whether the liability of payment of commission to agents has arisen during the relevant AY and decide in accordance with law - Remanded back
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