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2011 (12) TMI 178 - ITAT MUMBAITransfer Pricing - additions on account of GP rate and transfer pricing adjustment - benefit of 5% adjustment not given - adjustments made in relation to the entire sales – A.Y. 2007-08 - Held that:-The adjustments on account of transfer pricing are to be restricted only to the international transactions with the AE, and not to the entire turnover of the assessee as held in case of Dy. CIT v. Starlite [2010 (4) TMI 704 - ITAT, MUMBAI]. Similarly, in the pre 01.10.2009 position, the benefit of 5% is to be allowed to the assessee, even in cases where difference in value of international transactions and its ALP is more than 5% as held in case of Emersons Process Management India (P.) Ltd. v. Add CIT ([2011 (8) TMI 427 - ITAT MUMBAI]). The computation made by the AO is, therefore, required to be reworked. As regards the GP rate, addition was made due to fall in G.P. Rate the reason for which was explianed by assessee. The AO has not pointed out any defects in the books of accounts. In relation to international transactions with the AE, there is provision for separate TP adjustments, and merely because there is TP adjustment, entire books cannot be rejected in the absence of any defects. Further, while computing the GP rate for the year, for the purpose of comparison with the earlier year, the AO had not made any allowance for TP adjustments, which would also have impact on the GP rate and, therefore, making the additions on both the counts would result in double addition. Therefore, the order is set aside and restored back to A.O. for passing a fresh order .- Decided in favor for assessee for statistical purpose.
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