TMI Blog2011 (1) TMI 42X X X X Extracts X X X X X X X X Extracts X X X X ..... terms of clause (baa) of Sec.80HHC (4C) - matter remitted back to ascertain the nature of expenses Associated Enterprises (AE) - Transfer Pricing Officer (TPO) - clearly the price paid by the assessee in respect of these items is on higher side and TPO has correctly determined the arms length price and accordingly we confirm the addition in respect of this item. Decisions of Apex court in Ipca Laboratories Ltd. vs. Dy. CIT (2004 - TMI - 6141 - SUPREME Court266 ITR 521) and CIT vs. Shirke Construction Equipment Ltd. (2007 -TMI - 6560 - SUPREME Court) followed - I.T.A. No. 7626/Mum/2005, 195/Mum/2006 - - - Dated:- 16-7-2010 - Before Shri. T R Sood (AM) and Shri R S Padvekar (JM) Department by: Shri. Narendra Singh Assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chine Works 290 ITR 667. In this case, the Hon'ble Supreme Court has held as under: The principle reason for enacting a formula in section 80HHC of the Income Tax Act, 1961, is to disallow a part of the concession thereunder when the entire deduction claimed cannot be regarded as relating to exports. Therefore, while interpreting the words total turnover in the formula in section 80HHC one has to give a schematic interpretation. The various amendments made therein show that receipts by way of brokerage, commission, interest, rent, etc., do not form part of business profits as they have no nexus with the activity of export. The amendments made from time to time indicate that they became necessary in order to make the formula workable. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5/M/06 (assessee's appeal): In this appeal, assessee has raised the following grounds; 1. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) has erred in confirming that the adjustment made on account of excess price as compared to Arm's length price was liable to be made to the extent of ₹ 14,01,776. He ought not to have done so. 2. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) has erred in directing the assessing officer to re-compute the deduction u/s.80HHC(3)(a) after setting off of the business loss brought forward from the earlier assessment. He ought not to have done so. 9. Ground No.1: A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plied to the assessee at 1.05 US $. Since the value of Euro is much higher than the US dollar, therefore, price charged to the assessee was justified. As far as the other two items i.e. Amdea 05 and Butyl, Acrylate are concerned, in both these cases, the difference in price is about 4% which is less than 5% and thus, no adjustment could have been made because 2nd proviso to sub-sec.(2) of sec.92C clearly provides that if variation between the arms length price determined by the authorities and the price at which the transaction took place does not exceed 5%, then the actual price shall be taken to be the arms length price. 13. On the other hand, the ld. DR strongly supported the order of the CIT (A). 14. We have considered the rival s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions of the ld. counsel of the assessee. Second Proviso to sec. 92C(2) reads as under: Provided further that if the variation between the arm's length price so determined and price at which the international transaction has actually been undertaken does not exceed five per cent of the latter, the price at which the international transaction has actually been undertaken shall be deemed to be the arm's length price. The above clearly shows that if the difference is less than 5% then the actual price paid should be considered as arm's length price. The TPO as well as CIT (A) have clearly observed that difference in respect of these two items is 4% and, therefore, same has to be reckoned in terms of second proviso. Similar vie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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