TMI Blog2021 (3) TMI 229X X X X Extracts X X X X X X X X Extracts X X X X ..... AEs) and not the entity level transactions (which also include transactions with non-AEs). The TPO, in the instant case has computed transfer pricing adjustment in respect of entity level transactions, which cannot be countenanced. We, therefore, direct to restrict the transfer pricing adjustment only to the international transactions rather than the entity level transactions, of course, after giving due opportunity of hearing to the assessee. Calculation of PLI - What is essential to consider is the PLI computation of the comparable at the time of the passing of the original order by the TPO for ensuring that VRS expenses did not form part of the cost base as contended. The ld. AR did not readily have such a copy of the working of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and components. It provides sales and after-sales support services for the textile machinery and equipments manufactured and sold by the Rieter Group companies in India. It also carries out installation and commissioning of the machines/equipments sold by the Rieter Group companies and also provides warranty support services. A return was filed declaring loss of ₹ 48.00 crore. Certain international transactions were reported in Form No. 3CEB. The AO made a reference to the Transfer Pricing Officer (TPO) for determining the Arm s Length Price (ALP) of the international transactions. Instantly, we are concerned with the only international transaction of Purchase of goods (textile components/parts) with transacted value of ₹ 2,1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... el transactions. 5. Section 92 is first section of the Chapter-X containing special provisions relating to avoidance of tax. Sub-section (1) of section 92 provides that: `Any income arising from an international transaction shall be computed having regard to the arm s length price . Thus it is graphically clear that the ALP and the consequential transfer pricing adjustment are contemplated only in respect of the international transactions (with AEs) and not the entity level transactions (which also include transactions with non-AEs). The TPO, in the instant case has computed transfer pricing adjustment in respect of entity level transactions, which cannot be countenanced. We, therefore, direct to restrict the transfer pricing adjustment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of comparable Veejay Lakshmi Engineering Works Ltd. and the VRS expenses incurred by it should also be included in the operating cost base, which the TPO did not do. 9. We have heard both the sides and gone through the relevant material on record. The ld. AR has demonstrated with reference to the relevant material on record that the VRS expenses incurred by it have been finally included in the operating cost base. His principal and the only contention in this regard has been that similar treatment should be given to the VRS expenses incurred by Veejay Laskshmi Engineering Works Ltd. 10. In principle, there can be no dispute with VRS expenses incurred by any company forming part of the operating cost base, a proposition that has not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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