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2013 (11) TMI 224 - AT - Income TaxAdjustment of arm's length price - Rejection of comparables - Held that:- set of 8 comparables was taken by the TPO for the TP study in order to determine the ALP of the international transactions of the assessee company with its AEs relying on the assessment for the immediately preceding year in assessee's own case wherein similar set of eight comparables was confirmed by the DRP - the matter as involved in A.Y. 2006-07 has already been decided by the Tribunal accepting only one out of the eight comparables selected by the TPO/DRP namely IDC (India) Limited. Since the facts involved in the year under consideration are similar to A.Y. 2006-07 inasmuch as the set of eight comparables was taken by the TPO relying on the assessment for A.Y. 2006-07, we respectfully follow the order of the Tribunal passed on similar issue for A.Y. 2006-07 and hold that IDC (India) Limited is the only comparable company which is to be taken for the comparable study in order to determine the ALP of the transactions of the assessee with its AEs. The transfer pricing adjustment accordingly has to be recomputed by adopting the operating profit to cost ratio of 15.8% of IDC (India) Limited as against 12.6% shown by the assessee - Decided in favour of assessee. Adjustment as per the proviso to section 92C(2) - Benefit of ± 5% - Held that:- difference between the prime lending rate and bank rate is sought to be adopted by the assessee as the rate to eliminate the risk difference. As already noted, the claim of risk adjustment of the assessee has been rejected by the Tribunal in A.Y. 2006-07 for want of quantification of such adjustment which, according to the Tribunal, could be possible only when some real and accurate facts of difference in the risk assumed by the assessee and by the comparable are brought on record. The details furnished by the assessee, in our opinion, are hardly sufficient to comply with this requirement. It is also observed that in the case of Wills Processing Services (India) (P.) Ltd. (2013 (6) TMI 532 - ITAT MUMBAI) similar method was sought to be used by the assessee for risk adjustment and the same was rejected by the Tribunal holding that there is no corelation between the bank lending rates and risks involved as claimed by the assessee. It was held by the Tribunal that all the companies conducting business will have the same risk i.e. market risk, customer risk, government policy risk etc. associated with conducting business. It was also held that unless the risk is quantified in certain objective manner and can be represented by way of numbers, it is very difficult to make adjustment on presumptions and surmises - assessee has failed to quantify the risk adjustment by bringing certain real and accurate facts relating to the difference in risk assumed by the assessee vis-à-vis the comparable and in the absence of the same, its claim for risk adjustment cannot be allowed as rightly held by the authorities below. We therefore find no merit in assessee's claim for the benefit of ± 5% adjustment as well as for risk adjustment and reject the same - Decided against assessee.
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