Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2014 (4) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2014 (4) TMI 1096 - AT - Income TaxAdjustment in the operating margin of CDR unit - addition by the AO which was by taking average operating margin @ 23.72% while the CIT(A) directed the AO to take this margin @ 20.72% and confirmed the addition - Held that:- As after excluding the 5 comparables, the cash PLI of 9 companies as computed by the ld. AR and submitted before us, copy of which is given to the ld. DR, comes to 26.78%. In the Assessee’s case, the cash operating profit has been computed @ 22.45%. Therefore, the difference comes only 4.33% which is less than 5%. We noted that as per the proviso to Sec. 92C where more than one price is determined by the most appropriate method, the Arm’s Length Price has to be taken to be the arithmetic mean of such prices. We also noted that the said proviso during the impugned assessment year also provides that at the option of the Assessee the price which may vary from the arithmetic mean by an amount not exceeding 5% of such arithmetic mean be taken to be the Arm’s Length Price. Since the difference in the case of the Assessee is only 4.33% which is less than 5%, therefore, in our opinion, no addition on this account can be sustained in the case of the Assessee. We, accordingly, set aside the order of CIT(A) and delete the addition sustained by CIT(A) - Decided in favour of assessee. Market cost adjustment of 10.96% to the comparable uncontrolled price - Held that:- In our opinion, no interference is called for in the order of CIT(A). CIT(A) has rightly directed the AO to allow the adjustment @ 10.96% for marketing expenses after verifying the correctness of the data submitted by the Assessee for allowing the relief. Similar direction, we noted, has been given by CIT(A) in A.Y 2004-05 and 2005-06 and has been confirmed by this Tribunal. The ld. DR could not bring any cogent material or evidence before us which may compel us to take a different view than what has been taken by the CIT(A). - Decided against revenue
|