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2015 (3) TMI 9 - AT - Income TaxTransfer pricing adjustment - segmental details taken by the assessee in its TP analysis rejected merely on the ground that they are unaudited, as done by the TPO - Held that:- Find merit in the contentions of assessee that there is no point in rejecting the entire segmental details when the segmental activities are different and specific allocation keys are given for allocating the indirect expenses between different segments. In these facts and circumstances, we are of the view that it is incumbent upon TPO to examine the segmental details after verifying the allocation of direct and indirect expense made by the assessee with reference to the respective allocation keys and if on such examination/verification, it is found that the segmental financials are not reliable, he could reject the same by giving specific reasons. Otherwise, if the allocation of overhead is by and large fair and reasonable and the segmental results can be fairly and appropriately adjusted, by changing/adjusting the allocation, the TPO, in our opinion, should make such adjustments and do the Transfer Pricing Analysis on the basis of such adjusted segmental financials, instead of rejecting the same straight away. - remit this issue to the file of the AO/TPO to decide the same afresh - Decided in favour of assessee for statistical purposes. Adjustment on account of interest attributable to the excess credit period allowed by the assessee to its Associated Enterprise - addition of ₹ 1,60,66,825 made to the total income of assessee - Held that:- it is pertinent to note that credit was being offered by the assessee company even in the case of non-AE transactions and these internal comparables thus were available for the comparability analysis. As agreed by the learned representatives of both the sides, the average credit period offered by the assessee in the non-AE transactions can be taken as the credit period offered in an arm’s length situation. In this regard, the learned counsel for the assessee has submitted that the average credit period offered by the assessee to its AE, going by the quantum of receivables at the end of the year under consideration vis-à-vis corresponding turnover, is the same as offered to the non-AEs. The learned Departmental Representative, however, has contended that this mater requires verification and the Assessing Officer may be allowed to work out the average credit period actually offered by the assessee in case of non-AE transactions and compare the same with the credit period allowed by the assessee in the case of AE transactions. Remit this issue to the file of the Assessing Officer/TPO with a direction to decide the same afresh - Decided in favour of assessee for statistical purposes.
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