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2016 (12) TMI 1645 - AT - Income TaxTransfer Pricing Adjustment - selection of comparable - Held that:- The assessee is engaged in the business of manufacture and sale of turbo chargers. The assessee is also engaged in the business of Information Technology enabled Services (ITeS), thus companies functionally dissimilar with that of assessee need to be deselected from final list. Granting risk adjustment - Held that:- A perusal of the directions of DRP show that the assessee has not given detailed working of risk adjustment. The assessee has failed to point out the risks and their impact on financial results of their comparable companies. Thus, we are of the view that this issue needs a re-visit to the file of AO/TPO for re-adjudication. The assessee shall furnish the details of risk adjustment and the basis of its determination. The TPO/AO shall decide the issue de-novo after affording opportunity of hearing to the assessee, in accordance with law. Accordingly, ground raised in the appeal is allowed for statistical purposes. Non-granting of the benefit of +/-5% as per the proviso to Sec 92C(2) - Held that:- A perusal of the directions of DRP shows that the DRP has granted benefit of +/-5% to the assessee without granting standard deduction. The proviso to Section 92C has been amended by the Finance (No.2) Act, w.e.f 01.10.2009. Prior to the amendment the assessee had option to adopt a price different from the arithmetical mean by an amount not exceeding 5% of such arithmetical mean, that is the assessee had an option to claim the marginal relief of 5% with reference to the arithmetical mean, irrespective of the range of actual deviation between the margin disclosed by the assessee and the average mean margin. After the amendment, this option is not available to the assessee. This marginal relief partake the character of standard deduction. After the amendment this standard deduction is not available to the assessee. The ground no.8 is remitted back to the Assessing Officer to grant the benefit of +/-5% without granting standard deduction. Accordingly, ground raised in the grounds of appeal by the assessee is allowed for statistical purposes.
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