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2017 (12) TMI 1520 - AT - Income TaxTPA - rejection of aggregation approach adopted by the assessee for benchmarking its manufacturing activities - Held that:- While benchmarking the international transactions of assessee, wherein the assessee was engaged in manufacturing activities, then we hold that various activities are to be aggregated for determining the arm's length price of its international transactions. See aassessee's own case 2017 (12) TMI 1423 - ITAT PUNE Method to be applied as most appropriate method - whether internal comparability is to be made i.e. comparing the profitability of export to associated enterprises with domestic sales? - Held that:- The said issue was also adjudicated by the Tribunal in earlier years [2017 (12) TMI 1423 - ITAT PUNE] wherein the Tribunal held that while applying TNMM method, margins of assessee are to be compared with average margins of external comparable companies. Determination of PLI - TPO had applied net profit to cost to work out the PLI but the claim of assessee was that PLI of net profit to sales has to be applied - Held that:- As in assessee's own case for earlier year Tribunal directed the Assessing Officer to adopt the net profit to sales for determining PLI. Benefit of variation / reduction of 5% from the arithmetic mean - Held that:- The benefit of range of +/-5% is available if the variation does not exceed the said tolerance margin. International transactions of procurement support services provided to associated enterprises are to be aggregated and benchmarked along with international transactions under the manufacturing activities. Disallowance of deduction claimed under section 80IB - Held that:- The said issue is covered against the assessee by the earlier order of Tribunal and wherein, the Tribunal following the same parity of reasoning as in assessment year 2006-07 had upheld the orders of authorities below in allocating head office expenses, Director’s salary, etc to Daman unit and upheld the re-computation of deduction under section 80IB of the Act. Following the same parity of reasoning, we dismiss the ground of appeal No.7.1 raised by the assessee. Addition u/s 14A - Held that:- The assessee during the course of hearing has filed the details in respect of disallowance of expenses under section 14A of the Act at ₹ 2,80,144/- as against working filed before the Assessing Officer, copy of which is placed at page 680 of the Paper Book, under which the disallowance worked out to ₹ 19,63,021/-. On perusal of the statement filed by the assessee, we disallow sum of ₹ 19,63,021/- under Rule 8D(iii) of the Rules being disallowance to be made in view of provisions of section 14A of the Act. The assessee is cash rich company and the share capital and reserves & surplus of the said concern as on 31.03.2008 are sufficient to take care of investments made by the assessee. Consequently, no disallowance is made on account of interest expenditure under Rule 8D(ii) of the Rules by the Assessing Officer. Accordingly, the ground of appeal raised in this regard, is partly allowed.
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