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2017 (5) TMI 1166 - AT - Income TaxAdjustment towards Risk Profile of the Appellant compared with that of Comparable Companies - Held that:- As pointed out by the D.R, there is no thumb rule for risk adjustments in each and every cases, whenever the assessee claimed any risk adjustment in accordance with Rule 10C(2)(e). While arriving the ALP, the assessee has to identify and quantify the level of risk involved between the assessee and the comparables while undertaking for analyses in the transfer pricing documents. The risk adjustments could be given only to company to company basis considering levelof risk involved between the assessee and the comparable companies. It is primary duty of the assessee to provide requisite information pertained to the claim. Since the assessee did not discharge its initial onus and in the absence of information to compute the reliable accurate risk adjustments, it is not possible to grant risk adjustments claimed by the assessee. However, considering high degree of risk involved with the comparables, we are inclined to grant risk adjustments at 2% on adhoc basis. Accordingly, this ground is partly allowed. Adjustment towards Abnormal Expenses incurred by the Appellant during the year - Held that:- The assessee is a contract-manufacturer and having mark-up raised from 5% to 9.5% on the goods procured by it, later it was revised to 7%, so that the wastage suffered by the assessee taken care of by mark-up prices and manufactured goods. Once the price was marked up, there cannot be any loss to the assessee and the entire wastage is taken care by marked up price of sale price. Hence, we do not find any merit in the plea of the assessee with regard to claim of abnormal wastage. Abnormal depreciation as discussed in earlier, the assessee’s pricing pattern is marking up of 7% on the cost of goods manufactured. Being so, the increase in depreciation cost has also taken care of by mark up of sales price. Accordingly, the assessee cannot seek any further adjustments towards additional depreciation cost. This ground of appeal by assessee is also rejected. Reject the claim of deduction u/s.10B - Held that:- There was a business loss in the assessment year 2000-01 and the assessee has not claimed deduction u/s.10B and made a note in the statement of income that the company is claiming exemption u/s.10B from this assessment year onwards. There was no claim of deduction u/s.10B and also the Revenue is not allowed any claim u/s.10B of the Act in the relevant to assessment year 2000-01, as such it is to be noted that assessment year 2000-01 cannot be considered as first year of claim of deduction u/s.10B of the Act. From the assessment year 2001-02, deduction u/s.10B of the Act was to construed as first year of claim of deduction u/s.10B of the Act. Accordingly, it is to be allowed for ten consecutive years commencing from the assessment year 2001-02 ending on assessment year 2010-11. Accordingly, we direct the AO go grant deduction u/s.10B of the Act. This ground of the assessee is allowed.
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