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2011 (9) TMI 173 - AT - Income TaxArm's Length Price (ALM) - comparable cost - assessee was incorporated on 31.12.2002 as an indirect subsidiary of British Petroleum (BP).BP is one of the world's largest petroleum and petrochemical group - As per the Audit Report in Form No.3CEB, the Arm's Length Price of the international transactions was same as recorded in the books of account. - The difference in computation of ALP has arisen because of the exclusion by the TPO of FI and ME from the list of comparable cases supplied by the assessee. The learned CIT(A) vide para 4.16 of the impugned order, extracted above, has held that these two cases ought to have been retained in the set of comparable cases. - Held that:- These two cases which have been excluded by the TPO are not only substantially incomparable having different functional as well as product profile as compared to that of assessee-company but encompass wholly or majority of controlled transactions, thereby failing both the conditions of rule 10B. - these cases were rightly excluded by the TPO. The impugned order holding otherwise, is consequently set aside. - Decided in favor of revenue. Expunging two extreme profit cases from the list of comparables - Held that:- CIT(A), without considering any data of HT and DT or comparing it with the assessee's facts, simply ordered for elimination on sole the reason of their having high profit margins. He failed to test the facts of those cases on the touchstone of the mandate of sub-rule (2) read with sub-rule (3) of rule 10B. As such we are not inclined to uphold the impugned order on this score. - the cases of DT and HT shall be considered by the Assessing Officer/TPO as to whether they qualify their exclusion or not. The remaining exercise of the computation of ALP will be consequently done. - Appeal of the revenue allowed partly.
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