Assessee's appeal partially allowed, TNM Method dismissed, Excise duty exclusion upheld. Revenue's appeal dismissed.

The Tribunal partially allowed the assessee's appeal regarding the TPO's adjustment, dismissed the appeal related to the TNM Method, and upheld the exclusion of Excise duty from the total turnover under Section 10B as per the CIT(A)'s order. The Revenue's appeal was dismissed.

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Issues Involved:
1. Dispute over addition of Rs. 3,58,878 by CIT(A).
2. Disagreement on TNM Method application instead of RMP Method.
3. Excise duty exclusion from total turnover under Section 10B.
4. Adjustment of +/- 5% by TPO for international transactions.

Issue 1: Addition of Rs. 3,58,878 by CIT(A):
The appeals by the assessee and Revenue were against the CIT(A)'s order related to assessment year 2005-06 under section 143(3) of the Income Tax Act, 1961. The assessee contested the addition of Rs. 3,58,878 and the choice of TNM Method over RMP Method. The Tribunal found merit in the plea that the TPO did not allow a +/- 5% adjustment, as required by the proviso to section 92C(2) of the Act. The variation between the price paid and the arm's length price did not exceed 5%, thus the benefit of the proviso was allowed. The appeal by the assessee was partially allowed, and the appeal ground related to the TNM Method was dismissed.

Issue 2: Excise Duty Exclusion from Total Turnover under Section 10B:
The Revenue challenged the CIT(A)'s decision that Excise duty paid/payable should be excluded from the total turnover under Section 10B. The Tribunal noted that a similar issue had been addressed in the assessee's case for the assessment year 2007-08. Citing the Supreme Court's ruling in CIT Vs. Laxmi Machine Works, it was established that Excise duty should not be part of the total turnover for calculating deductions under Section 10B. Following the precedent set in the assessee's previous cases, the Tribunal upheld the CIT(A)'s order to exclude Excise duty from the total turnover. Consequently, the Revenue's appeal was dismissed.

Issue 3: Adjustment of +/- 5% by TPO for International Transactions:
The assessee's appeal focused on the TPO's refusal to allow a +/- 5% adjustment when computing the addition based on the arm's length price of international transactions. The Tribunal agreed with the assessee's argument that the proviso to section 92C(2) mandated no adjustment if the variation did not exceed 5%. Relying on the Mumbai Tribunal's decision in Thyssenkrupp Industries India (P.) Ltd. Vs. Addl.CIT, the Tribunal allowed the assessee's appeal on this issue.

In conclusion, the Tribunal partially allowed the assessee's appeal regarding the TPO's adjustment, dismissed the appeal related to the TNM Method, and upheld the exclusion of Excise duty from the total turnover under Section 10B as per the CIT(A)'s order. The Revenue's appeal was dismissed.

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