TMI Blog2011 (1) TMI 1245X X X X Extracts X X X X X X X X Extracts X X X X ..... DRA POOJARI, JJ. For the Appellant : Smt. V. Madhuvani, DR For the Respondent : Shri Kunj Vaidya ORDER:- PER :Chandra Poojari, Accountant Member This appeal preferred by the Revenue is directed against the order passed by the CIT(A) III, Hyderabad dated 15.12.2008 and pertains to the assessment year 2004-05. 2. The Revenue raised the following grounds in its appeal: 1. The CIT(A) failed to appreciate that allowability of an expenditure depends not merely on an agreement between the assessee and the A.E. but on the evidence of specific services having been rendered by the tax payer to the AE either directly or indirectly. 2. The CIT(A) erred in directing the assessing officer to make adjustment only Rs.25, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uly, 2003 onwards was required to be paid by the AE along with mark up 10%. TPO computed the expenditure incurred by the assessee from July, 2003 to 15 th March, 2004 at Rs.3,89,02,467/- which was required to be reimbursed by the AE along with mark up of 10% amounting to Rs.38,90,247/-. Thus, the ALP of reimbursement of expenses was determined at Rs.4,27,92,714/- and the difference of Rs.38,90,247/- was adjusted in the said international transaction vide its order dated 9.10.2006 u/s 92CA(3) of the Act. On appeal the CIT(A) directed that the expenses incurred during 1.1.2004 to 14.3.2004 is to be treated as expenses incurred towards the product development service, on which the assessee is eligible for 10% mark up. Hence, the Revenue is in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 92C. According to authorised representative transfer price falls within 5% range of the arm s length price and if so the proviso to Section 92C(2) as applicable, there will be no requirement of any adjustment. 6. The learned authorised representative for the assessee submitted that the TPO determined the arm s length price to be 6.34% in the TP Order. As per the above computation, even the income received by CIMG which is a sum of reimbursement of pre operative expenses and the sales revenue, the actual transfer price falls with 5% range of the arm s length price. 7. He further submitted that if one were to apply the above benefit of 5% per the second Proviso to Section 92C (2) as applicable for the assessment year 2004-05, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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