TMI Blog2012 (8) TMI 330X X X X Extracts X X X X X X X X Extracts X X X X ..... comparables and the sales price charged by the assessee to its AE was within the safe harbor limit of 5% - Decided against assessee. Interest on Income Tax refund - Business income vs Income from other sources - Held that:- It is observed that there is a contradiction in the findings recorded by the A.O. conceding it to be interest on income-tax refund whereas and CIT (A) conceded it to be interest on bank deposits, hence matter restored to file of the A.O. to ascertain exact nature of interest income received. - ITA 5161/M/2007 - - - Dated:- 20-6-2012 - SHRI P.M. JAGTAP, AND SHRI AMIT SHUKLA, JJ. Appellant by: Shri Ajeet K. Jain Respondent-Cross Objector by: Shri Ashok J. Patil O R D E R PER P.M. JAGTAP, AM: This a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one of the sides has been able to throw any light on this aspect, we set aside the impugned order of the Ld. CIT (A) on this issue and restore the matter to the file of the A.O. with a direction to decide the same afresh after ascertaining the exact nature of interest income received by the assessee. Ground no.1 of revenue s appeal is accordingly treated as allowed for statistical purposes. 5. In ground no.2, the revenue has challenged the action of Ld. CIT (A) in deleting the addition of Rs.6.61 crores made by the A.O. by way of transfer pricing adjustments as worked out by the TPO. 6. The assessee in the present case is a partnership firm which is engaged in the business of manufacturing as well as import and export of diamonds . T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rgin of 6.84% to the operating cost of the assessee of Rs.119,13,37,621/-. Since the sales were shown by the assessee at Rs.120,66,72,775/- he worked out the transfer pricing adjustments at Rs.6,61,52,339/- as per his order passed u/s.92CA(3). Based on the said order passed by the TPO, addition of Rs.6,61,52,339/- was made by the A.O. to the total income of the assessee on account of transfer pricing adjustment in the assessment completed u/s.143(3) vide order dated 28.12.2006. 7. The addition made by the A.O. by way of TP adjustment was challenged by the assessee in an appeal filed before the Ld. CIT (A) and various submissions were made on behalf of the assessee before him in support of its case that the addition made by the A.O. by way ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. CIT (A) also found merit in the stand of the assessee that the said average OP / cost margin should be applied only to the relevant transactions of export by the assessee firm to its AEs and not to the total export sales made by the assessee as was done by the TPO. Accordingly, applying the average OP cost margin of 5.871% to the operating cost of sales to AEs of Rs.25.54 crores, the ALP of export sales made by the assessee firm to its Associated Enterprises (AEs) was worked out by the Ld. CIT (A) at Rs.27.04 crores. Since the difference between the ALP so worked out and the sales price shown by the assessee at Rs.27.87 crores was less than the safe harbor limit of 5%, the Ld. CIT (A) held that no addition on account of TP adjustment was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts associated concerns as submitted by the Ld. Counsel for the assessee. Even the Ld. D.R. has not been able to raise any contention to point out any mistake or any infirmity in the working prepared and furnished by the assessee to show that even as per the rectification order passed by the TPO, the addition made by way of TP adjustment in the case of the assessee is not sustainable. 9. It is also observed that out of the 33 comparables taken by the TPO, OP to cost ratio shown in 30 cases was in the range of 3 to 8% and only in three cases, the same was abnormally high at 29.44%, 10.05% and 11.53%. As found by the Ld. CIT (A), M/s. Vishindas Holaram whose OP to cost ratio was 29.44%, was DTC site holders, having assured supplies of rough ..... X X X X Extracts X X X X X X X X Extracts X X X X
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