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2022 (1) TMI 1338 - AT - Income TaxTP adjustment - grant of mark-up on recovery transactions - assessee argued before the lower authorities that there was mark-up on these expenses which are incurred at the instance and behest of the AE and expenses by the assessee for administrative convenience are recovered on a cost to cost basis - AR alternatively argued the additional grounds stating that as per OECD guidelines and Indian Transfer Pricing provisions, aggregation of transactions could be made - HELD THAT:- As considering the alternative submissions of the ld. AR, the issue is covered by the Pune Bench of the Tribunal in the case of Cummins India Ltd. [2015 (1) TMI 520 - ITAT PUNE] export value was less and these parties were one of customers and therefore, the risk involved was high. Further, the frequency of such transactions was very low. In view of the above facts and circumstances, the comparison between the export to associated enterprises and export to third parties would not provide accurate results as economic value of the transactions, risk involved were different. We find merit in the plea of the assessee in this regard. We uphold the aggregation of transactions in the TP study carried on by the assessee where the said transactions after benchmark were at arm's length price, no adjustment was to be made. In view thereof, we find no merit in the analysis carried out by the TPO by benchmarking the transactions of exports to third parties with exports to associated enterprises resulting in addition. In view of our discussion herein above, we delete the addition. Deduction u/s. 10AA - travelling and conveyance expenses and other expenditure incurred in foreign currency from the export turnover while computing the deduction u/s. 10AA of the Act and making a corresponding reduction in the total turnover - HELD THAT:- This issue is covered in favour of the assessee in the case of CIT v. HCL Technologies Ltd. [2018 (5) TMI 357 - SUPREME COURT] wherein it was held that when object of formula in section 10A for computation of deduction is to arrive at profit from export business, expenses excluded from export turnover have to be excluded from total turnover also; otherwise, any other interpretation makes formula unworkable and absurd and hence, such deduction shall be allowed from total turnover in same proportion as well. Hence this issue is decided in favour of the assessee and against the revenue. Short grant of MAT credit u/s. 115JAA - HELD THAT:- AO is directed to give appropriate tax credit.
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