TMI Blog2016 (5) TMI 118X X X X Extracts X X X X X X X X Extracts X X X X ..... assets employed by the Assessee - Held that:- ITAT has followed the decision of this Court in Li & Fung India Pvt. Ltd. v. Commissioner of Income Tax (2014 (1) TMI 501 - DELHI HIGH COURT ), where an identical issue had come up for consideration. This Court, in the said decision, came to the conclusion that the computation of the operating profit margin by increasing the cost of the sales leads to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20th August 2015 passed by the Income Tax Appellate Tribunal ( ITAT ) in ITA Nos. 6463 5082/Del/2011 for the Assessment Years ( AYs ) 2007-08 2008-09 respectively. 3. The Assessee is a wholly owned subsidiary of Mitsui Co. Ltd., Japan which is one of the leading Sogo Shosha establishments in Japan. A Sogo Shosha is a company undertaking general trading and links buyers and sellers for a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referring to Rule 10B(1)(e)(i) held that the net profit margin realized by the Assessee from an international transaction entered into with associated enterprises is to be computed in relation to the costs incurred, sales effected or assets employed by the Assessee. The services were treated as equivalent to trading and the income received by the Assessee from the support services was treated as i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner of Income Tax (2014) 361 ITR 85 (Del.), where an identical issue had come up for consideration. This Court, in the said decision, came to the conclusion that the computation of the operating profit margin by increasing the cost of the sales leads to an arbitrary adjustment of the Assessee's income and that such alteration resides plainly outside the Rules and the provisions of the Act . T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... determination of the additions to be made to the taxable income of the Assessee whereby the TPO had construed the transactions of the Assessee to be within the +/- 5% range in terms of the second proviso to Section 92C of the Act. As far as this question is concerned, since it is merely a consequential issue with the main issue having been decided in favour of the Assessee, the Court does not fin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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