TMI Blog2014 (4) TMI 75X X X X Extracts X X X X X X X X Extracts X X X X ..... hority – Decided partly in favor of assessee. Transfer pricing adjustments - determination of ALP - operating margin - Held that:- The difference in the operating margin, as per the TPO's order itself, is within the range of 5% and, accordingly, no adjustment under law is required to be made. No doubt, the safe harbor rule of 5% is with reference to the arm's length price; the same however translates to an equivalent difference in the operating margin, as the costs toward the same are not disturbed. In fact, if a part of the interest cost, as contended by the Revenue, is to be excluded from the operating cost, being a part of the capital cost, the assessee's profit margin would rather stand further improved. - Addition is not valid - De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us to prove its return and the claims preferred thereby being only on the assessee (refer: CIT v. Calcutta Agency Ltd. [1951] 19 ITR 191 (SC). So however, the assessee having claimed before the Assessing Officer (A.O.) of having sufficient free reserves, which stood deployed for the purpose, we, in the interest of justice, only consider it fit and proper that the matter is restored back to allow the assessee an opportunity to substantiate its case before the assessing authority, who shall decide the same in accordance with the law per a speaking order. We decide accordingly. 4. The second and the only other issue arising in the instant case is the transfer pricing (TP) adjustment in the sum of Rs.1,49,53,475/- made in respect of inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The difference in the operating margin, as per the TPO's order itself, is within the range of 5% and, accordingly, no adjustment under law is required to be made. No doubt, the safe harbor rule of 5% is with reference to the arm's length price; the same however translates to an equivalent difference in the operating margin, as the costs toward the same are not disturbed. In fact, if a part of the interest cost, as contended by the Revenue, is to be excluded from the operating cost, being a part of the capital cost, the assessee's profit margin would rather stand further improved. We, therefore, consider the sustenance of the said adjustment, as directed by the DRP, as not valid in law and, accordingly, direct its deletion. We de ..... X X X X Extracts X X X X X X X X Extracts X X X X
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