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2013 (5) TMI 309 - AT - Income TaxAllowability of benefit of tolerance margin - The matter in dispute relates to the question Whether prior to insertion of second proviso to Section 92C(2), the benefit of 5% tolerance margin as prescribed under proviso to Section 92C(2) of the IT Act, 1961 for the purposes of determining the arm's length price of an international transaction is allowable as a standard deduction in all cases, or is allowable only if the difference is less than 5%? Held that:- After the retrospective amendment to the second proviso to Section 92C(2) by the Finance Act, 2012, the benefit of tolerance margin is available only when the variation between the arm's length price as determined under Section 92C(1) and the price at which the international transaction has actually been undertaken does not exceed the tolerance margin. Once it exceeds the tolerance margin, no benefit under the proviso would be available to the assessee and the ALP as determined under Section 92C(1) shall be considered. The question referred is answered accordingly, in favour of the Revenue and against the assessee. Assessee has also challenged the constitutional validity of retrospective amendment to second proviso to Section 92C(2). Held hat:- Income Tax Appellate Tribunal is a creation of the Income-tax Act and not a constitutional authority. It has to interpret the provisions of the Income-tax Act as it stands. It cannot adjudicate upon constitutional validity or otherwise of any provision of the Income-tax Act.
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