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The Commissioner of Income Tax Versus M/s Tara Jewels Exports Pvt. Ltd.

2015 (12) TMI 1130 - BOMBAY HIGH COURT

Computation of ALP - whether international transactions the AO/TPO is precluded from taking into consideration transactions with Non Associate Enterprises, while arriving at the ALP using the Net Transactional Margin Method (TNMM); whereas Rule 10B(1)(e) mandates the consideration of profit margins with unrelated enterprises? - Held that:- The question as proposed by the revenue does not seems to arise from the impugned order of the Tribunal nor is the method of determination of ALP on applicati .....

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transactions entered into by the respondentassessee with it's AEs. It is evident from the provisions of Chapter X of the Act that the adjustment which has to be done to arrive at ALP is only in respect of the transaction with it's AEs. Thus no fault can be found with the order of the Tribunal.

Revenue is unable to point out how the aforesaid finding of the Tribunal is incorrect in law in the face of the clear provisions in Chapter X of the Act. The question as framed by the revenue to .....

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ax Appellate Tribunal (the 'Tribunal'). The Assessment Year involved is A.Y. 200607. 2. Although numerous questions were proposed by the revenue in the memo of appeal, at the hearing, Mr. Arvind Pinto, the learned Counsel for the revenue urges only following reframed question of law for our consideration: Whether in law and on the facts of the instant case, was the Tribunal justified in holding that while computing the ALP of international transactions the AO/TPO is precluded from taking .....

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rprises (AE) determining it's Arm's Length Price (ALP) in respect of transactions with AE's by using Cost Plus Method. The Transfer Pricing Officer (TPO) rejected the same and applied the Transaction Net Margin Method (TNMM). On application of TNMM, the TPO arrived at the rate of 4.79% being the margin by which the transaction value would have to be enhanced to determine the ALP. However the TPO while applying the margin of 4.79% applied the same in respect of the universe of sales o .....

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ve terms by the Assessing Officer. 5. On appeal, the Tribunal by the impugned order recorded the fact that the only grievance of the respondentassessee before it was the application of the margin of 4.79% computed by the TPO under the TMM across all it's sales and not restricted only to the international transactions entered into by it with it's AE. The Tribunal by the impugned order held that the entire exercise of determining the ALP is done in accordance with Chapter X of the Act and .....

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