TMI Blog2012 (10) TMI 206X X X X Extracts X X X X X X X X Extracts X X X X ..... issue of 92C [(+) (-)] adjustment is proposed to be amended which shall be kept in mind. - IT Appeal No. 5479 (Delhi) of 2011 - - - Dated:- 11-5-2012 - R.P. TOLANI AND A.N. PAHUJA, JJ. Vijay Iyer and Manoneet Dalal for the Appellant. Peeyush Jain for the Respondent. ORDER R.P. Tolani, Judicial Member - These are assessee's appeal and stay petition against the order of ACIT, Cir. 12(1), New Delhi dated 31-10-2011 passed u/s 143(3)/r.w.s. 144C of the I.T. Act, 1961 (pursuant to DRP directions dated 8-9-2011), relating to A.Y. 2007-08. 2. We first take up assessee's appeal. The assessee has raised as many as 13 grounds of appeal to challenge the order of TPO/AO/DRP. However, the effective ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in law in not applying the proviso to section 92C of the Act and has failed to allow the appellant the benefit of variation of 5 percent in determining the Arm's length price. 3. Brief facts are: The assessee company is engaged in providing sourcing and procurement services to its group entities located outside India, for which it was remunerated on cost plus 12 percent basis, which included all operating expenses other than income-tax, wealth-tax, fringe benefit tax, interest etc. 3.1 The assessee filed its T.P. report, taking TNMM as the most appropriate method using operating profit divided by the operating cost as the profit level indicator ( PLI ). For identification of comparable companies, assessee selected followi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sly computed. (iv) Appropriate adjustments on difference of working capital employed by the assessee and comparable companies was not provided. (v) The economic adjustments for discounting on account of risks assumed by the assessee were not allowed. (vi) TPO erred in relying on financial data which was not available in the public domain. (vii) TPO erred in using single year data for determination of ALP instead of multiple year data which evens out variations in industry and product cycles. (viii) TPO erred in not applying the proviso to sec. 92C. 3.5 DRP rejected some of the contentions of the assessee without justification. Following directions were given to AO/TPO: Ground no. 8 regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The different benches of the ITAT have upheld such adjustment [Vedaris Technology ITAT (Del); Sony India [114 ITD 448(Del)]. Mentor Graphics, E. Gain communication 2008-TIOL-282-ITAT- Pune. Global Ventedge 2010-TOP; 24 ITAT Del; TNT India P. Ltd. 2011-TII-39-ITAT-BANG-TP,etc.]. Now that data is furnished, the AO/TPO is therefore directed to verify the same and grant working capital adjustment based on the OECD formula and by taking 10.25% as the PLR. The aforesaid rate is adopted as the State Bank of India which is the leading bank in India has charged this rate in the year under reference for working capital loans. 3.6 AO while framing the assessment did not carry out the directions of the DRP in this behalf. 3.7 It is furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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