TMI Blog2013 (11) TMI 817X X X X Extracts X X X X X X X X Extracts X X X X ..... rgin of 11.03% shown by the assessee - No adjustment can be made to the arm's length price declared by the assessee – Decided against the Revenue. No opportunity to the TPO while disturbing the margins by adopting financials – Held that:- TPO has used multiple year data for arriving at the average OP/TC margin of the comparable companies. Whereas Rule 10B(4) of IT Rules specifically provides for considering the current year data of the comparable companies unless it falls within the exception as provided in proviso to Rule 10B(4). It is also a fact on record that current year data of the comparable companies were available in public domain. The CIT (A) has simply followed the statutory provision while determining the OP/TC margin of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k office services. The assessee undertook a TP study to justify the price charged to its Associated Enterprise ( AE in short) to be within the arm's length. For that purpose, the assessee adopted the Transactional Net Margin Method (TNMM) as the most appropriate method and operating profit/total cost (OP/TC) as the profit level indicator. 5. The assessee selected six companies as comparables with average OP/TC margin based on multiple year data worked out at 10%. Since the assessee's OP/TC margin of 11.03% was higher than the average margin of 10% of the comparables, the price charged by the assessee to its AE was found to be within the arm's length. 6. During the proceedings before the TPO for determining the arms's length price of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TMT Ltd.,. It was further contended that the TPO has used multiple year data of the comparables to arrive at the OP/TC margin which is in complete violation of rule 10B(4) of the IT Rules which mandate that only current year data of the comparable companies are to be considered. The assessee also furnished a workout showing OP/TC margin of the comparable companies on the basis of the current year data i.e., the data for the financial year 2002-03 which is as under:- S. No. Company Name OP/TC margin based on Current yr (i.e. FY 2002-03) Data Including Excluding Hinduja TMT Ltd. Hinduja TMT Ltd. 1. AMI Computers (I) Ltd -63% -63% 2. Ace Software Exports Ltd. 8% 8% 3. Hinduja TMT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hereas on excluding the said company the average OP/TC would be 8%. Similarly, if both the companies i.e. i.e. Hinduja TMT Ltd., and Vans Information are excluded from the list of comparables, the average OP/TC margin of the remaining comparables on the basis of current year data comes to (-17%). The CIT (A) therefore held that since the assessee's OP/TC margin is 11.03% which is much higher than the OP/TC margin of the comparable companies by using the current year data, no adjustment can be made to the arm's length price declared and accordingly he deleted the addition made by the Assessing Officer. 10. We have heard the contentions of the parties and perused the materials on record as well as the orders of the authorities below. Undisp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact the learned Departmental Representative wanted to withdraw the said ground. 12. After perusing the order of the TPO as well as the CIT (A), we find the aforesaid contention of the learned AR to be correct, as the said ground does not arise out of the order passed by the TPO or CIT (A). In aforesaid view of the matter, we dismiss the said ground as not maintainable. 13. In ground No.5, the department has raised the issue of the CIT (A) not providing any opportunity to the TPO while disturbing the margins by adopting financials for the year ended on 31-3-2003. 14. We have heard the submissions of the parties on this issue and perused the orders of the lower authorities. It is a fact n record that the TPO has used multiple year data ..... X X X X Extracts X X X X X X X X Extracts X X X X
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