2012 (6) TMI 237 - ITAT BANGALORE

Adjustment made by the TPO to the arm's length price - rejecting the documentation maintained by the assessee and conducting the search of the comparables and also obtaining the information and documentation not available in public domain by exercising his powers u/s 133 – Held that:- Considering the case of Genisys Integrating Systems (India) (P.) Ltd. Versus Deputy Commissioner of Income-tax[2011 (8) TMI 952 (Tri)] wherein this Tribunal has directed the AO to adopt the filter of turnover and also to give the assessee an opportunity of rebutting the information and documents obtained by the TPO by exercising his powers u/s 133(6) -remand these two issues to the file of the AO to re-consider the same as per the guidelines issued - in favour of assessee by way of remand.

Adjustment sought by the appellant towards receivable, marketing and credit risk borne by the comparables - assessee has claimed the risk adjustment which is not allowed by the TPO on the ground that the assessee also has the risk of having a single customer – Held that:- the assessee had acquired the business earning income out of the said transaction by cost plus basis, thus, it can be seen that the assessee has not encountered the risk of having a single customer, whereas the same cannot be said as regards the comparables - the comparables were dealing in open market and were prone to the marketing and technical risks, thus the risk encountered by the assessee cannot be said to be the equivalent risks attached to the comparables - the risk attributed to the assessee by the TPO is an anticipated risk whereas the risk attributed by the assessee to the comparables is an existing risk - direct the TPO to decide the percentage of risk adjustment to be made.

Computation of the deduction u/s 10A by excluding an amount from the ambit of export turnover without excluding the same from ambit of total turnover – Held that:- As decided in the case of CIT v. Tata Elxsi Ltd. [2011 (8) TMI 782 (HC)] the AO to exclude the amount both from the export turnover as well as the total turnover for the purpose of computing the deduction u/s 10A of the IT Act – in favour of assessee.

Not providing the benefit of +/- 5 percent of the range at the time of computing the transfer pricing adjustment – Held that:- As decided in the Genisys Integrating Systems (India) (P.) Ltd. Versus Deputy Commissioner of Income-tax[2011 (8) TMI 952 (Tri)] direct the AO to give plus or minus 5% variation for the purpose of computing the ALP.