Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2019 (3) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (3) TMI 325 - AT - Income TaxTP adjustment - Comparable method - variation in the quality and design of the carpets - average method - weighted average method - we set aside this issue to the record of the A.O./TPO to carry out a fresh exercise of determining the arm’s length price as well as the price of the international transaction by using weighted average instead of simple average of all the transactions entered into by the assessee with AE as well as all the transactions of sale of carpets to non-AE. Further once the comparable uncontrolled price taken are more than one then the benefit of second proviso to Section 92C(2) of the Act has to be allowed and thereby if the price of the international transaction is within the tolerance range of + 5% of the arm’s length price then no adjustment is called for. TP adjustment - granting of loan to the AE - notional interest on the outstanding receivables from the AE - credit allowed to the AE beyond 60 days - arm’s length interest at LIBOR rate as against the PLR applied by the TPO - HELD THAT:- CIT(A) has rightly applied the LIBOR for the purpose of bench-marking the credit allowed to the AE for realization of sale proceeds. CIT(A) has also considered the exchange rate gain against the said arm’s length interest which in our view, is not proper as the exchange gain or loss would be part of the sale proceeds and therefore would consequently increase or decrease the sale price at the time of computing the arm’s length price and bench-marking of international transaction. Hence the for ex-gain or loss has to be taken as part of the sale price in both the cases of international transaction as well as comparable uncontrolled price. In other words, the exchange gain or loss would be part of the sale price of the transaction between the assessee and AE as well as non-AE. The effect of the exchange gain or loss has to be given in computing of arm’s length price being the part of sale proceeds as well as comparable price. The adjustment on account of credit allowed to the AE beyond 60 days shall be made at the time of determining the arm’s length price of sale transaction and not to be considered as a separate international transaction. Accordingly, this issue is also set aside to the record of the TPO/A.O. for computation of arm’s length price alongwith main international transaction of sale. Appeal of the revenue allowed for statistical purposes only.
|