Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2012 (6) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2012 (6) TMI 478 - AT - Income TaxTransfer pricing - arm’s length price - addition on account of adjustment in respect of transactions with Associated Enterprises by taking profit margin at 27.84% as against margin of 20.17% of the assessee - Denial of plus / minus 5 % benefit – Held that:- TPO/AO erred and the Hon'ble DRP further erred in upholding / confirming the action of the learned TPO/AO in denying the benefit / reduction of 5 percent from the arithmetic mean as provided in proviso to Section 92C(2) of the Act while computing the adjustment to the total income of the Appellant. benefit of 5% is to be allowed to assessee even in cases where difference in value of international transactions and its ALP is more than 5%, and accordingly it was held that computation made by AO is therefore required to be reworked. Regarding direction of DRP – working capital adjustment - DRP while giving direction to AO to pass assessment order specifically directed to work out the working capital adjustment but AO has failed to comply with said direction on the ground that relevant details of comparables is required and this requires an exhaustive exercise to be done before giving working capital adjustments. AO was not justified to defy the direction of DRP and not to give working capital adjustment while making addition at ALP of the transactions of assessee with AEs. matter restored to AO to work out margin of profit at ALP of all 30 comparable companies of transactions with AEs and also to give working capital adjustment
|