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The commissioner of income tax-II Versus li &fung (india) pvt. Ltd.

2015 (3) TMI 613 - DELHI HIGH COURT

Correctness of the ITAT’s order - directing the AO/TPO for fresh determination of the addition originally made on account of Arm’s Length Price, which was specified in the course of the proceedings - Held that:- Question of law urged in both the appeals does not arise since it already stands settled in the previous order reported in [2014 (1) TMI 501 - DELHI HIGH COURT] - pertaining to the present assessee wherein held that there is no legal authority under the Income Tax Act, 1961 or the Rules .....

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o be the most appropriate method, the only rules and norms prescribed in that regard could have been applied to determine whether the exercise indicated by the assessee yielded an ALP. The approach of the TPO and the tax authorities in essence imputes notional adjustment/income in the assessee’s hands on the basis of a fixed percentage of the free on board value of export made by unrelated party venders. Appeal dismissed. - ITA 505/2014 ITA 506/2014 - Dated:- 11-3-2015 - S. Ravindra Bhat And R.K .....

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r directing the AO/TPO for fresh determination of the addition originally made on account of Arm s Length Price, which was specified in the course of the proceedings. 2. At the outset, this Court notices that the basis on which the Transfer Pricing Officer s (TPO) directions were acted upon by the Assessing Officer (AO) in finalising the assessment was by the increased cost base of the total cost incurred for determining ALP in both the years in question. 3. On this the ITAT noticed that this Co .....

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LFIL‟s cost base for applying the operating profit over total cost margin. LFIL‟s compensation model is based on functions performed by it and the operating costs incurred by it and not on the cost of goods sourced from third party vendors in India. Allotting a margin of the value of goods sourced by third party customers from Indian exporters/vendors to compute the appellant s profit is unjustified. This Court is of opinion that to apply the TNMM, the assessee s net profit margin re .....

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