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2016 (8) TMI 1423 - AT - Income TaxTP adjustment - non adjustment against the custom duty component while determining the ALP - HELD THAT:- TPO has not considered the custom duty adjustment on the reason that it is equivalent to central excise in commercial market. This is not correct. The Tribunal consistently holding that while determining ALP, there should be suitable adjustment in respect of custom duty. Accordingly, we direct the A.O. to give suitable adjustment against the custom duty component while determining the ALP. Air freight charges adjustment while computing the ALP - HELD THAT:- Assessee is in the field of manufacturing and testing of throttle body, rocker arm, solenoid valve, LPG gas mixer, vaporizer, LPG Tank etc. and the assessee has to transport the raw materials very urgently to meet the end of the customers. The assessee is importing the entire various components which is required to manufacture its final products. In the course, it incurred air freight charges, which is abnormal expenses and adjustments to be made while determining the ALP, as it is affecting the operating profits. The plea of the assessee is to be accepted, more so, following case of Transwitch India Pvt. Ltd. V. DCIT [2012 (5) TMI 314 - ITAT DELHI] wherein the adjustments towards abnormal expenses incurred by the assessee to be considered while determining the ALP. Accordingly, we direct the TPO to consider the same while determining the ALP. Variation in exchange rate adjustment while determining the ALP - assessee entered into contract in adverse prices fixed on the prevailing exchange rate and due to fluctuation in exchange rate, there is loss and that exchange fluctuation to be considered while determining the ALP - HELD THAT:- It is normal that exchange rate is subject to fluctuation due to economic conditions. While determining the ALP, one has to consider these factors, more so, our view is fortified by cases of Honda Trading Corp. India Pvt. Ltd. V. ACIT [2013 (6) TMI 184 - ITAT DELHI] for the assessment year 2007-08 and DHL Express (India) Pvt. [2011 (4) TMI 856 - ITAT MUMBAI] for the assessment year 2006-07. Accordingly, we direct the TPO to provide considerable exchange fluctuation adjustment while determining the ALP - issue is remitted to the file of the TPO for determining the ALP after considering the above three components i.e. customs duty adjustment, air freight adjustment and foreign exchange fluctuation adjustment. - Appeal of the assessee is partly allowed for statistical purposes.
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