TMI Blog2010 (11) TMI 839X X X X Extracts X X X X X X X X Extracts X X X X ..... ver, and not to the total turnover of the assessee. - Applying the said ratio, the Assessing Officer are directed to modify the assessment and make the adjustment only to the extent of difference in arm s length price operating profit with adjusted profit with reference to 9.71 per cent of the turnover and not to the total turnover of the assessee. Grant of 5 per cent profit - HELD THAT:- The issue is also supported by the aforementioned decisions relied upon by ld. AR. Therefore, the Assessing Officer are directed to give the said adjustment also to the assessee. We direct the Assessing Officer to go through the figures shown in the chart and if the chart prepared by the assessee is in accordance with the aforementioned directions, then, the Assessing Officer will compute the arm s length price as per the aforementioned chart and give proper relief to the assessee - The appeal filed by the assessee is partly allowed for statistical purposes. - IT APPEAL NO. 4333 (DELHI) OF 2009 - - - Dated:- 18-11-2010 - I.P. BANSAL AND A.K. GARODIA, JJ. M.P. Lohia for the Appellant. Kishore B. for the Respondent. ORDER I.P. Bansal, Judicial Member - This is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S.No. International transaction Value (in Rs.) Method used 1. Import of design and drawing 1,31,33,134 TNMM 2. Import of technical know-how 69,69,753 TNMM 3. Royalty 6,59,20,412 TNMM 4. Rent received 72,000 TNMM 3. So far as it relates to the method adopted by the assessee as TNMM and profit level indicator i.e., operating profit margins over operating revenue, these two factors have been found by the Assessing Officer to be proper as adopted by the assessee and the observations of the Assessing Officer in this regard are contained in para 6.3 of the assessment order. Therefore, there is no dispute so as it relates to the method adopted by the assessee and the profit level indicator shown by the assessee. 4. The Assessing Officer vide para 11 of the assessment order has computed the operating profit/operating income at 4.17 per cent and the computation of the Assessing Officer is as under : "Total Operational Revenue 92,25,03,849 Less Operating Expenditure 88,55,56,775 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 885,556,775 Add: Fringe benefits 1,518,721 Operating profits ( OP ) 38,465,795 OP/OR 4.17% Arm s length margin as determined by A.O. 5.30% Addition on account of arm s length price made by A.O. 10,426,908 Particulars Related party cost Unrelated party cost Total Expenditure (other than related party expenditure relating to design drawings, technical know-how and royalty) 799,533,476 799,533,476 Transactions with AEs -Import of design and drawing 13,133,134 - 13,133,134 -Import of technical know-how 6,969,753 - 6,969,753 -Payment of royalty 65,920,412 - 65,920,412 -Rent received Aggregate value of transactions 86,023,299 799,533,476 885,556,775 Ratio 9.71% 90.29% 100% Proportionate adjustment based on value of international transactions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment should be given to the assessee and for such proposition he has relied upon the following decisions : ( i ) Philips Software Centre (P.) Ltd. v. Asstt. CIT [2008] 119 TTJ 721 (Bang.) : Adverting to this case, ld. AR drew our attention towards para 5.71 in which the Tribunal as per clause 11 thereof summarises the position regarding section 92C(2) of the Act as under : "5.71. We, therefore, summarise our conclusion as follows: ( i )................................... ............................................... ................................................ ( xi )The proviso to section 92C(2) of the Act provides a standard deduction of 5 per cent to the tax payers. The only condition for availing this benefit is that it is subject to the option of the tax payer." ( ii ) Skoda Auto India (P.) Ltd. v. Asstt. CIT [2009] 30 SOT 319 (Pune): ld. AR invited our attention towards the following observations in the said decision : "20. The only other issue that is argued before us is the adjustment for + .5 per cent. Learned representatives agree that this issue is now covered in favour of the assessee by a series of Tribunal decisions including decision i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er simple, ld. AR was required to submit a chart giving the calculations regarding above adjustments to arrive at an arm s length price in respect of international transactions of the assessee with its associate enterprise. The said chart reads as under : "Computation of working of adjustment having regard to the value of international transactions of the assessee. Particulars Amount ( ) Total operating revenue ( OR ) 922,503,849 Less: Operating expenditure 885,556,775 Add: Fringe benefits 1,518,721 Operating profits ( OP ) 38,465,795 OP/OR 4.17% Arm s length margin as determined by A.O. 5.30% Transfer Pricing adjustment - Addition on account of arm s length price made by A.O. ( A ) 10,426,908 Particulars Related party cost Unrelated party cost Total Expenditure (other than related party expenditure relating to design drawings, technical know-how and royalty) 799,533,476 799,533,476 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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