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2023 (11) TMI 994 - AT - Income TaxTP Adjustment - Assessment u/s 144C - addition on account of short term capital gain calculated by the AO adopting a different sale consideration as against declared by the assessee - Allegation of violation of natural justice as AO exceeded his jurisdiction by not following the finding of the TPO as well as the direction of the learned DRP as AO interpolated his own figure of sale consideration which is not justified - whether the AO is bound by the order of TPO passed u/s 92CA(3) even in the situation when the material evidence was not brought on record by the assessee in T.P. proceedings? HELD THAT:- It is stated that the fair market value (FMV) was computed as per DCF methodology and was duly supported by a valuation report obtained from an independent Chartered Accountant. AO substituted the sale consideration on the basis of the sale of shares of Wormhole by the assessee in the next financial year i.e. F.Y. 2017-18. The assessee claimed before the ld. DRP that the total assets of Wormhole also included the assets (situated outside India) other than investment in Orbgen and, therefore, the AO grossly erred in deriving the value of shares of Orbgen on the assumption that 100% value is relatable to its investment in Orbgen. There is no dispute that the ld. TPO did not propose any adjustment. As per Section 92CA(4) of the Act, the AO is required to compute the Arm’s Length Price in conformity with the ALP so determined by the TPO. But in the present case, the AO deviated from the order of TPO. Such deviation is not permissible under law in the light of the statutory provisions and judicial pronouncements as relied by the assessee in its written submissions - See M/S. CUSHMAN AND WAKEFIELD (INDIA) PVT. LTD. [2014 (5) TMI 897 - DELHI HIGH COURT] Thus where TPO has not proposed any adjustment and valuation has been adopted by the AO without verifying the true and correct facts qua the assets, we are unable to sustain such erroneous finding both on legality and facts. The grounds raised by the assessee are allowed.
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