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2013 (9) TMI 408 - AT - Income TaxTransfer pricing adjustment - Selection of comparables - Abnormal expenses - Low capacity utilization - Held that:- adjustment in case of the manufacturing segment has been made on the total turnover and not limited to transactions with AE. The sales of AE was Rs. 7,88,70,082/- and, therefore, the AO is required to compute the cost of such sales by applying margin in case of the assessee which was (-)5.41%. Thereafter, PLI of 9.49% is required to be added to the cost of sales to arrive at the market value of the international transaction. The AO is directed to make the adjustment only to the international transaction and not to the entire turnover. The assessee had selected seven comparables, which have been rejected by the TPO holding them not comparable as being not engaged in trading of diamonds and on account of related party transactions in some cases. The TPO selected ten comparables giving mean margin of 3.47%. The assessee objected to six of comparables selected by TPO and the objections were rejected after giving specific reasons in respect of each comparables as mentioned in para 4.3 earlier. The assessee in the appeal before us has also raised objections in relation to some of the comparables. However we find, that the submission made by the learned AR was quite general in nature not supported by any evidence. No details of P&L account and balance sheet or annual reports were filed in respect of some comparables to substantiate the claim. The objection raised in relation to comparables is therefore rejected. However we find substance in the additional ground raised by the assessee requesting for benefit of +/-5% margin. The additional ground has already been admitted by us being a legal ground. We, therefore direct the AO to allow the benefit of +/- 5 % benefit to the assessee, which has also not been objected to by the learned DR before us - Decided partly in favour of assessee
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