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2016 (5) TMI 118 - HC - Income TaxTransfer pricing adjustment - TPO, referring to Rule 10B(1)(e)(i) held that the net profit margin realized by the Assessee from an international transaction entered into with associated enterprises is to be computed in relation to the costs incurred, sales effected or assets employed by the Assessee - Held that:- ITAT has followed the decision of this Court in Li & Fung India Pvt. Ltd. v. Commissioner of Income Tax (2014 (1) TMI 501 - DELHI HIGH COURT ), where an identical issue had come up for consideration. This Court, in the said decision, came to the conclusion that the computation of the operating profit margin by increasing the cost of the sales leads to an arbitrary adjustment of the Assessee's income and that such alteration “resides plainly outside the Rules and the provisions of the Act”. The Court held that the TPO”s reasoning to enhance the costs by considering the cost of manufacture and export of finished goods was nowhere supported by Rule 10B(1) (e) of the Rules. - Decided against revenue
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