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2012 (2) TMI 366 - AT - Income TaxTransfer pricing adjustment to ALP Revenue contended that distinct operating profit margin to cost in the preceding year qua the AEs and non-AEs should not be applied to the ratio of operating profit to cost in the current year on a combined basis Held that:- Nature of international transactions in the year under consideration with its AE s are similar to the preceding year and Operating profit margin for the current year compares favorably with that finally determined for the preceding year therefore, CIT(A) order of deleting addition is upheld. Addition on account of non-charging of interest on trade debtors from the AEs Held that:- Section 92B transpires that the transactions of 'sale' and 'lending ... money' have been distinctly set out. It is evident that interest income is associated only with the lending or borrowing of money and not with sale. When the international transaction is that of 'sale', the interest aspect is embedded in it. Early or late realization of sale proceeds is only incidental to the transaction of sale, but not a separate transaction in itself. No adjustment is warranted. Further, relevant consideration is the taxation of the enterprises of the group that are chargeable to tax in India. If the concept of over all higher or lower rate/amount of tax in the other countries in which AEs are situated is taken into consideration, then Chapter-X of the Income-tax Act would become meaningless.
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