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2013 (1) TMI 16 - AT - Income TaxDifference in arm's length price - CIT(A) deleted an addition as AO had not made such an addition based on Section 92(3) but had applied Section 10B r.w.s. 80-IA(10) for such addition - AO referred case to TPO - Held that:- A reading of the above reproduced order of the TPO will clearly show that the prices at which assessee sold its products to its Associate Enterprise were much higher than the arm's length price fixed by the TPO. Sales, as per the books, effected by the assessee to its Associate Enterprise came to Rs. 24,26,80,083/- , whereas, the arm's length price was Rs. 18,79,25,631/- only. There is nothing whatsoever in the order of TPO which required or recommended any adjustment to the value of the international transactions. TPO did not deem it necessary to effect any revision of the sales price as shown by the assessee in its books. Such a recommendation was not made since substituting the sale price shown by the assessee with arm's length price determined, would have resulted in the income getting reduced - There being no recommendation by the TPO for any revision in the arm's length price A.O. was not at all required to make any adjustment in the arm's length price. AO invoking the provisions of s. 80-IA(10) r/w s. 10B(7) - Held that:- Considering the case decided in Tweezerman (India) (P.) Ltd. v. Addl. CIT [2010 (4) TMI 892 - ITAT CHENNAI] the provisions of s. 80-IA(10) do not give an arbitrary power to the AO to fix the profits of the assessee. The AO has to specify as to why he feels that the profits of the assessee are being shown at a higher figure. He has further to show as to how he has computed the ordinary profits which he deems to be the ordinary profits which the assessee might be expected to generate. The fact that the AO has also not shown any calculation on the basis of which he has determined the excess profit received by the assessee cannot stand in view of the fact that he has not shown as to what he feels is the actual ordinary profit which the assessee could have generated nor has he shown any particulars he has used for arriving at such a figure especially when the assessee himself has filed the calculation showing the error in the difference between the profits and the ALP as filed before the TPO. Under these circumstances the reduction of the eligible profits of the assessee as done by the AO by invoking the provisions of s. 80-IA(10) r/w s. 10B(7) is unsustainable and consequently the same is deleted - no reason to interfere with the order of CIT(Appeals).
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