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2013 (11) TMI 189 - AT - Income TaxTransfer Pricing Adjustment – Held that:- The TPO was directed to verify the claim made by the assessee whether the sum was already excluded and thereafter, arrived at the operating income - If the operating income was arrived at after excluding by the assessee in TP study, then no further reduction of the said amount was warranted - Hence, this issue was restored to the file of Assessing Officer/TPO for verification and necessary action, if required. No submissions/arguments were raised in the course of hearing with regard to other issues of TP adjustment, apart from the above discussed issues - Hence, the issue related to rejection of use of non-contemporaneous data, the TPO's action in taking recourse under section 133(6) without giving an opportunity of cross examination to the assessee, filter of onsite turnover 75% etc. are not considered/ adjudicated. Calculation of operating income and net margin - The Assessing Officer/TPO was directed to work out the ALP of the assessee in accordance with the directions of the Bench and if found that the differential in the margin of the assessee and the comparables is beyond 5% bandwidth recognized in proviso to section 92C(2) of the Act, then adjustment was required to be made to the reported value of the assessee's transaction with its AE. Due to non-availability of full information about the segmental details as to how much was the sale of product and how much was from the services, therefore, this entity cannot be taken into account for comparability analysis for determining arms length price in the case of the assessee - Neither the TPO nor the DRP have noticed that there was bound to be a difference between the Assessee and Megasoft and the profit arising to the Megasoft as a result of the existence of the software product segment and no finding had been given that reasonably accurate adjustments can be made to eliminate the material effects of such differences - The Assessing Officer/TPO to exclude, after due verification, those comparables from the list with the related party transactions or controlled transactions in excess of 15% of the total revenue for the financial year 2006-07.
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