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2019 (1) TMI 1707 - AT - Income TaxTP Adjustment - application of safe harbour rules under the 2nd proviso to section 902C(2) which provides for (+/-) 5% variation from the arm’s length price - international transaction in dispute in the present case is the redemption of the preference shares at the rate of dollar 1. The said international transaction has been benchmarked by the Transfer Pricing Officer on the basis of valuation report submitted by the assessee wherein the same was valued at dollar 1.05 - HELD THAT:- As relying on case Dy Director of IT vs. Development Bank of Singapore [2013 (8) TMI 175 - ITAT MUMBAI] and DCIT vs. Begadiya Brothers Pvt. Ltd. [2018 (10) TMI 1793 - ITAT RAIPUR] variation of (+/-) 5% have been accepted by the ITAT for the single rate used for bench marking the arm’s length price of the international transaction. Hence in accordance with the ratio from the above cases, the relief for variation of 5% sought by the assessee is to be granted from the arm’s length price accepted by the Transfer Pricing Officer is justified. The distinction brought about by the learned CIT(A) that when, one rate is considered then safe harbour rules do not apply, is not mentioned the statute books and the same cannot be sustained. Hence when the assessee is granted the benefit of safe harbour rules as mentioned in the 2nd proviso to section 92C(2) the price at which the international transaction has actually been undertaken is to be deemed to be the arm’s length price. This is so because if the (+/-) 5% variation is granted from the arm’s length price of international transaction determined at dollar 1.05 the price of dollar 1 at which redemption has been done by the assessee is to be accepted. - Decided in favour of assessee 10A deduction service charges recovered from its 100% subsidy - HELD THAT:- We find that the issue is squarely covered in favour of the assessee by the decision of ITAT and Hon'ble High Court in assessee’s own case.
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