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2021 (3) TMI 146 - ITAT BANGALORETP Adjustment - payment made by the assessee after 5% mark up - tested party - HELD THAT:- When it is admitted by DRP that the functions and risks of the assessee are more complex in nature and numerous adjustments would have to be made, in our considered opinion, as per the Tribunal order cited by learned AR of the assessee having been rendered in the case of Ranbaxy [2008 (1) TMI 445 - ITAT DELHI-H], the foreign AEs in the present case should be considered as tested party as has been considered by the assessee in the TP study. This is not the case of the TPO or DRP that the data of AEs are not available or not reliable because this is admitted position that the foreign AEs are paid 5% mark up and therefore, even if in the comparable cases, no mark up is paid by the customers of such uncontrolled comparables, then also, 5% mark up paid by the assessee in the present case will be within ALP as per 2nd proviso to section 92C(2) in which it is specified that if the variation between the Arm’s Length Price and price at which international transaction has actually been undertaken does not exceed 5% of transaction price, there should not be a T P adjustment. So in the present case, if cost incurred is 100, the assessee is paying 105 after 5% mark up and therefore, even if in the case of the comparable, the payment is made of ₹ 100/- without any mark up then also the payment made by the assessee after 5% mark up is excess by 5% only for which no TP adjustment can be made up in these two assessment years involved in the present two appeals i.e. A. Y. 2010 – 11 and 2011 – 12 because the amendment in this proviso has taken place from Assessment Year 2012 – 13 and therefore, in the present two years, the unamended provisions are applicable and as per that, for up to +/- 5% difference, no T P adjustment is called for in these two years. We find no merit in the TP adjustment proposed by the TPO and approved by DRP and AO and we delete the same in both years.
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