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2011 (1) TMI 108 - AT - Income TaxArm’s length price – Addition of income - The appellant company is engaged in the business of production and sale of iron ore pellets - The assessee had entered into two types of international transactions viz., Commission payments and Sales to its Associated Enterprise (AE) located abroad - The assessing officer referred the matter of determination of Arms Length Price (ALP) in respect of these International transactions to the Transfer Pricing Officer (TPO) in accordance with sec. 92CA of the Act – TPO has made addition in the income as regard to sale to associated enterprises - The Assessing Officer shall not make any adjustment to the arm’s length price determined by the taxpayer, if such price is unto 5% less or unto 5%more than the price determined by the Assessing Officer. In such cases the price declared by the taxpayer may be accepted – In this case difference works out to only 1.6% which is within the permissible range of + /- 5% as prescribed by the CBDT - The proviso to section 92C(2), “Provided that where more than one price may be determined by the most appropriate method, the arm’s length price shall be taken to be the arithmetical mean of such prices” - In the instant case, only one price has been determined under “Most appropriate method - the question of application of the proviso does not arise - Accordingly, we hold that the assessee is not entitled to the concession, as prescribed in the proviso to sec. 92C(2) – Appeal is allowed
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