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TMI Blog2023 (4) TMI 1223X X X X Extracts X X X X X X X X Extracts X X X X ..... 2010-11. 2. The grounds raised in the appeal are as under: "1. Your appellant being aggrieved by the order passed by Learned Dispute Resolution Panel, Ahmedabad, directions dated 10.12.2014, presents this appeal on following grounds. 2. The Learned Dispute Resolution Panel, Ahmedabad has erred in not allowing Upward Revision of Rs.12,39,23,444/- towards purchase price of import purchase on difference of arms length price in relation to international transactions though fully explained. The addition made to be deleted." 3. The sole issue in the present appeal, it was common ground, related to transfer pricing adjustment of Rs.12,39,23,444/- made to the international transaction of import of machine parts in the case of the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 26% of operating sales (C) Rs.140,87,30,955/- Total Price paid as per books of accounts (D) 1,53,26,54,399/- Shortfall being adjustment u/s.92CA (G=D-C) Rs.12,39,23,444/- Value of international transaction Rs.38,26,44,483.2 5% of the ALP determined by assessee Rs.1,91,32,224.16 5. He, thereafter, stated that his challenge to the impugned adjustment made to the international transaction was on the following grounds: i) Quantum of operating sales of the assessee taken in the above table at Rs.156,07,47,790/- was incorrect, and the correct figure of operating revenue was Rs.160,79,18,331/-; ii) Comparables finally taken for determining the Arms Length mean Profit margin / Profit Level Indicator (PLI),needed adjustment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansactions (same as D) 149,27,73,277 Correct Figure as per Assessee and argued by AR Ratio (G= F/D) 24.533% Proportionate Adjustment (H= ExG) 1,01,72,900 Within +-5% Range? Total Cost Side (Debit) AE Transactions (F) 36,62,23,484 5% of international Transactions 1,83,11,174 Proportionate Adjustment 1,01,72,900 Whether within Range? YES Therefore, we shall proceed to deal first with these arguments made by the assessee. 7. With regard to the figure of operating revenue to be taken at Rs.160.79 crores as against Rs.156.07 crores taken by the Department, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore Ld. AO vide assessee's letter dated 03.03.2014. The copy of the same is placed at page 317 of PB Therefore, we request Hon'ble panel member to kindly consider the aforesaid income as operating income and revise the margin computation of the assessee accordingly." .... .... .... .... "2.4 Further, during the year assesses has gained Rs.44,008,963.23/- from foreign exchange fluctuations. The said exchange fluctuation is only on account of purchase of raw material and sale of finished goods. We submit lh.il such foreign exchange gain shall be considered as an operating income. The assessee in its' TSR has considered the said income as operating income; however, Ld.TPO without giving an;1 opportunity trailed the same as non- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rance claim received by the assessee and foreign fluctuation gains. He also pointed out that both relates to raw-material consumed by the assessee in the operation of its business of manufacturing heavy machines. The Revenue has been unable to controvert this factual contention of the assessee. 12. In view of the same, we agree with the ld.counsel for the assessee that both the amounts of insurance claim and foreign exchange fluctuation need to be added to the operating revenue of the assessee for the purpose of arriving at the ALP of the international transaction. Thus, this contention of the assessee is accordingly allowed. 13. The next contention of the assessee in relation to the transfer pricing adjustment made pertains to the adjust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e that by applying 9.74% PLI of comparables to the operating revenue of the assessee of Rs.156.07 crores, the ALP of the operating cost of the assessee was arrived at Rs.140.87 crores, while the actual operating cost incurred by the assessee was Rs.153.26 crores. The difference of two of Rs.12.39 crores was adjusted to the international transaction for purchase of spares and parts of Rs.38.26 crores. He stated, therefore, that clearly for arriving at the ALP of the international transaction entity level adjustment had been made. He contended that this adjustment ought to have been made at the transaction level. The case laws in support of its contentions that the adjustment ought to have been made at the transaction level are - i) C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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