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2016 (10) TMI 103 - AT - Income TaxTransfer pricing adjustment - working of the PLI by the assessee and by the TPO/AO - bone of contention is the fluctuating price of aluminium - main contention of the assessee is that since it had a fixed price contract with its USA based AE and which contract has been accepted by the revenue authorities, it is not proper to give effect to the extra ordinary items of cost due to higher cost of raw material i.e. “Aluminium” - Held that:- We find that if the adjustment for raw material i.e. higher cost of aluminuim during the year under consideration is taken as extra ordinary item for the computation of PLI, then the margins of the assessee are within the range of ± 5% with the PLI of the comparable companies. It is also an admitted fact that the profit margin of the assessee is directly affected by the price of the aluminium during the year under consideration. Since, the assessee is having a fixed price contract with its AE, it cannot be increase the sale price whereas the margins of the comparable companies are not restricted by fixed sale price. Therefore, the margin of the assessee company will definitely be less due to increase in the price of aluminium qua the sale price. Therefore, the adjustment in respect of the substantial increase in the cost of raw material i.e. “aluminium” has to be made for the working of correct PLI. We, therefore, do not find any error or infirmity in the computation of the Upward Adjustment as worked out by the First Appellate Authority after giving the benefit of adjustment for raw material “extra ordinary item”. We decline to interfere. Appeal filed by the Revenue is accordingly dismissed
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