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2012 (9) TMI 42 - ITAT MUMBAIAddition on account of Transfer Pricing Adjustment - assessee contested that out of the 11 comparables 3 of the selected companies have 80 times, 24 times and 76 times of the turnover of the assessee company - Held that:- Following the decision in DCIT Versus Indo American Jewellery Ltd. [2010 (5) TMI 530 - ITAT, MUMBAI] wherein comparables selected by revenue authorities were rejected by the Tribunal on the ground that their turnover was more than 8 times and 11 times respectively of the turnover of the assessees. Respectfully following these decisions the three comparables taken by the revenue authorities namely BHEL, REL and L&T are rejected and direct the exclusion of the same for the purpose of 'comparability analysis' - in favour of assessee. Exclusion of commission income for the purpose of computing operating profit margin (OPM) - Held that:- As decided in assessee's own case that the commission income, which has been excluded from the profitability of the assessee, is not a passive income but an operational income as assessee is the local contact point for the ABs and is a virtual projection for the ABs in India giving them visibility and presence, is engaged in rendering warranty services for these direct sales on which commission is earned, and a part of its marketing efforts also contribute to this earning, thus consider it appropriate that commission income on direct sales should not be excluded from the profitability of the assessee - in favour of assessee. Exclusion of liquidated damages for the purpose of computing operating profit margin (OPM) - Held that:- There is nothing on record to show the basis on which provision was made by the assessee for liquidated damages and whether there is any policy consistently adopted by the assessee in making such provision. Having regard to this fact of the case, it is difficult to accept the contention of the assessee that the provision for the liquidated damages is a part of operating expenses and the same needs to be taken into account for the purpose of computing OPM - against assessee. Disallowance of working capital adjustment on the final list of comparable companies - Held that:- Considering decision by the Tribunal in assessee's own case for the AY 2006-07 wherein a direction was given by the Tribunal to allow working capital adjustment at 1.55% as against 0.66% made by the TPO. Keeping in view the said decision the AO is directed to verify the details of working capital adjustment and allow appropriate working capital adjustment - in favour of assessee for statistical purposes. The final adjustment on account of transfer pricing, if any, has to be made only in respect of transactions with AE and not in respect of entire turnover of the assessee as made by the revenue authorities - in favour of assessee. Addition on taking the enhanced value of consideration as per the stamp authorities - computation of short-term capital gain on sale of building - Held that:- As decided in Income-tax Officer Versus United Marine Academy [2011 (4) TMI 15 - ITAT MUMBAI] capital gain arising from the transfer of depreciable asset u/s. 50, the provisions of section 50C can be applied to adopt the value assessed for stamp duty payment as full value of consideration - against assessee. Addition made on account of provision for variable pay - Held that:- Respectfully following the decision of the co-ordinate Bench of this Tribunal in assessee's own case for the AY 2006-07 remitting the matter to the file of the AO for deciding the same afresh after giving the assessee an opportunity to substantiate its claim that the liability on account of provision for variable pay is ascertained liability in the light of additional evidence filed by the assessee as well as such other material as the assessee may wish to rely upon - in favour of assessee for statistical purposes. Grant of less credit of tax deducted at source - Held that:- Direction to the AO to grant credit for TDS as per the law after verifying the claim of the assessee from the relevant record including the TDS certificates - in favour of assessee for statistical purposes.
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