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2012 (4) TMI 120 - AT - Income TaxAddition u/s 92CA(4) of Rs.1,93,48,372 - A reference u/s. 92CA(1) of the I.T. Act for the Assessment Year 2004-05 was made to the TPO for computation of Arm's Length Price (ALP) in relation to the international transactions carried out by the assessee - TPO noted that the assessee has used TNMM method and its OP/TC comes to 1.8%. By taking comparable margins as per Annexure-I, the TPO noted that the OP/TC ratio comes to 20.42% for the sample set - TPO vide notice dated 24.11.2006 asked the assessee to show cause as to why the mark-up earned by the assessee at 10% upon cost be not considered as under pricing of the services to the parent company as the industry is earning a mark-up of over 30% - It is only after this incomplete list showing lesser profit than the profit declared by the assessee was brought to the notice of the TPO that he excluded the 47 loss making companies to determine the mean average profit at 20.42% - the submission of the Ld. Counsel for the assessee that there is no basis for only excluding the loss making companies and not excluding the high profit making companies or companies which are not at all comparable considering their size, volume of turnover and other factors. In our opinion, the whole exercise of selecting the comparables by the TPO is not proper and is in a haphazard manner - Decided in favor of the assessee Regarding addition of Rs.1,13,84,034/- made by the AO on account of income received from the holding company treated as advance by the assessee deleted by CIT(A) - Held that: during the course of assessment proceedings the assessee has given a statement that it has received advance towards market research analysis services rendered during the year - Appeal is partly allowed by way of remand to AO
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