TMI Blog2013 (1) TMI 806X X X X Extracts X X X X X X X X Extracts X X X X ..... Decided in fravor of assessee - ITA No.6972/Mum/2010 - - - Dated:- 23-1-2013 - SHRI R.S.SYAL, AM AND SHRI VIVEK VARMA, JM For the Petitioner : Shri B.V. Jhaveri / Ms. Manju Sisodia For the Respondent : Shri Ajeet Kumar Jain/ Shri Praveen Kumar ORDER PER R.S.SYAL (AM) : This appeal by the assessee is directed against the order passed by AO under section 143(3) r.w.s. 144C(13) of the Income Tax Act,1961 (the Act) on 27.7.2010 in relation to the assessment year 2006-07. 2. The assessee filed revised grounds, which have been taken into consideration while disposing of the present appeal. The first five grounds are against the addition made by the AO pursuant to the adjustment proposed by the Transfer Pricin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cing the amount of Non-operating expenses, that is, Donation and Interest after adding bank charges being non-interest element, to the amount of total expenses debited to the P L account of ₹ 215,82,57,038/-. It is on this figure of ₹ 212,90,49,767/- that the TPO applied rate of 4.79%, being arithmetical mean of the comparable cases chosen by him and hence worked out the figure of adjustment at ₹ 6,43,05,759/-. Eventually, the AO made addition for this proposed adjustment. 4. The grievance of the Ld.AR to this adjustment is only two fold. His first contention is that the figure of closing stock should be excluded from the total income determined by the TPO and second the rate of 4.79% computed by the TPO of the comparab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch figure of cost on goods sold when considered with other items of cost constitutes the total cost. It is impermissible to add up figure of closing stock without giving effect to the figure of opening stock. In our considered opinion the TPO erred in computing operating profit of the assessee at ₹ 3.76 crores by considering wrong figure of sales at ₹ 216,67,59,965/- also inclusive of the figure of closing stock without giving effect to the figure of opening stock. It was open to the TPO to apply the PLI as OP/Sales, in which case again only the figure of sales, was required to be considered without any reference to the figures of opening or closing stocks. As the TPO has erred in deducing the correct figures of either total co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pricing adjustment is required to be made only in respect of transactions between the AEs. In the provisions, as are applicable to the assessment year under consideration, it is wholly impermissible to apply such provisions in respect of transactions with non-AEs. We, therefore, overturn the impugned order on this score and direct the AO / TPO to compute ALP in respect of international transactions alone and restrict the amount of adjustment, if any, to such transactions only. 8. Ground No.6 about disallowance under section 14A of the Act was not pressed by Ld. AR. The same is, therefore, dismissed. 9. The only other ground which survives for our consideration is against disallowance of PF and ESIC dues amounting to ₹ 28,986/ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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