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2016 (11) TMI 731 - AT - Income TaxRejection of the accounting method adopted by the assessee for recognition of revenue and computation of the income - CIT (A) reversed the finding of the AO so far as the rejection of the books of account as well as estimation of the income at the rate of 8% but held that the income of the assessee should be computed on the basis of the actual cost and revenue as recorded in the books of account and has been certified by the NHAI - Held that:- It is not disputed by the assessee that the revenue of ₹ 14,11,08,715/- as well as cost of ₹ 14,29,36,737/- are the actual figures as per the bills raised by the assessee and cost shown in the books of account of the assessee. Further this amount is also certified by the NHAI in the IPC. Therefore in view of these undisputed facts, we do not find any error or illegality in the impugned order of the CIT (A) qua this issue. However, as regards the plea of the assessee that the consequential adjustment in the subsequent year is required, we are of the view that as per the rule of consistency the adjustment on this account is consequential and no direction is necessary. TP adjustment - limited grievance of the assessee in respect of the comparable selected by the TPO is regarding Progressive Constructions Ltd, having RPT of 61% - Held that:- There is no quarrel on the point that while determining the ALP of an international transaction, it has to be tested by comparing with uncontrolled price, which means that the comparable price should not be influenced by the transaction between the related parties. Therefore, uncontrolled price taken as ALP shall not have any revenue from RPT. However, 0% RPT is not practically possible and therefore in the due course adjudication process, the Tribunal has taken a consistent view that in the normal course 15% is the tolerance range of RPT which can be relaxed maximum to 25%. In the case of the assessee, neither the assessee nor the TPO has applied the filter of RPT. However, it is a relevant factor for selecting the comparable price that RPT should not exceed the tolerance range as discussed above. In view of the above discussion, we set aside this issue to the record of AO / TPO to verify the RPT of the comparables and then apply a suitable filter of RPT not exceeding the maximum tolerance range of 25%. Since the income of the assessee has been recomputed by taking into consideration a different revenue and cost amounts as it was taken by the assessee in the return of income, therefore, the AO / TPO is directed to recomputed the adjustment on account of ALP by considering the margins of the assessee as per the income computed by the CIT (A). Accordingly the issue of TP adjustment is set aside to the record of the AO/TPO. On the objection of the assessee regarding non-application of TP provisions when the AE of the assessee is also subjected to the tax jurisdiction of India, we find that when the transactions in question are falling under the ambit of definition of ‘international transaction’ as provided u/s.92B of the Act, then the AE being tax resident of India will not take out the matter from the purview of the TP provisions. Accordingly, we do not accept the objections raised by the assessee in this regard.
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