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2017 (1) TMI 454 - AT - Income TaxTransfer pricing adjustment - existence of AE - Cost Plus Method (CPM) for determining the ALP - Held that:- We find that the assessee had filed audited accounts for year under appeal along with its return of income, that it had claimed that IT's were entered into with its AE. s, that later on it claimed that Star and DTL were not its AE's, that no documentary evidence was produced before the revenue authorities in support of its claim, that it did not file any confirmation or certificate from the auditors about the incorrectness of the audit report especially about the existence of AE's. Therefore, we are of the opinion that order of the FAA does not suffer from any legal infirmity. Confirming the same, we decide the first ground of appeal against the assessee. With regard to the markup of 23. 45%, we find that the assessee had included only two of the items of the profit and loss account i. e. salary and the rent, that it had not included the other charges for determining the ALP. We are of the opinion that the matter needs further verification on part of the AO. If the assessee had not incurred any expenditure for the alleged three items same should not be considered for mark-up purposes. The issue is restored back to the file of the AO for the limited purposes i. e. to decide as to whether the assessee had claimed expenditure under the head salary and rent only for mark-up purposes. If so, necessary orders may be passed.
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