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2022 (3) TMI 1133 - AT - Income TaxTP Adjustment - comparability - HELD THAT:- Companies functionally dissimilar with that of assessee funnctions need to be deslected. MAT computation u/s 115JB - HELD THAT:- Provision for bonus as well as provision for long term service are both ascertained liability and cannot be added to book profit under section 115JB. Determination of ALP in respect of international transaction of textile machinery manufacturing segment and auto components manufacturing segment - HELD THAT:- The reasoning of the CIT(A) for considering the entire sales in manufactured finished goods segment for determination of ALP is that certain components and raw materials used in manufacture of finished goods are also sourced from AE and there is a possibility of the cost of such component having been bargained at a price which is not at arm’s length. This presumption of the CIT(Appeals) is without any basis. He has not demonstrated with actual figures as to how there would be impact on profit margin on sale of finished products to AE because of purchases of some components from AE. He has given examples which are imaginary figures. Apart from this, the TPO has accepted that purchase of raw material and components by the assessee from its AE is at arm’s length. Therefore, the basis on which the CIT(A) proceeded to apply the ALP test for transactions with non-AE is neither correct on facts nor permissible in law. As rightly contended by the assessee, section 92 of the Act can be applied only in respect of international transactions i.e., transactions with AE. Transfer pricing provisions and various judicial precedents, we hold that the transfer pricing adjustment should be restricted only to the AE related transactions of the assessee. Adoption of PLI - HELD THAT:- We direct the TPO to adopt PLI as OP/Sales. The TPO is directed to compute the ALP in accordance with the directions contained in this order, after affording opportunity of being heard to the assessee.
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