TaxTMI 
TaxTMI 
2011 (6) TMI 130
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....rming the Order of ld. Asstt. Comm. of Income-tax, Circle 1(2), BRD on account of upward adjustment in international transaction on the plea that similarly placed companies have better margin as compared to your appellant's company. 1.01 Your appellant says and submits that the Hon'ble CIT(A) had erred in not considering the other income, mainly consisting of export incentives for the purpose of calculating margin with other companies whose net profits are comprising of the other income. 1.02 Your appellant further says and submits that the Hon'ble CIT(A) had erred in not considering the plea of your appellant that data furnished by the ld. A.O. in respect of various companies is not comparable with that of your appellant company on v....
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....that the profit of business ensuing to the assessee did not appear to be the coefficient of the turnover of the business of international transaction carried out by the assessee during the year with its associate enterprises. As the operating margin appears low, the A.O. proposed to make upward adjustment in the ALP by treating the instances of similarly placed companies and made upward adjustment after allowing the assessee reasonable opportunity to rebut the objection of the department. The A.O. stated that the assessee has not been able to prove in terms of documents that the transaction between the assessee company and its principal was at arm's length price. The details on the basis of which the revenue held that there was a case to di....
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....nt company. It was contended by the appellant that the comparison can be made when there exist similar situation but no comparison can be made with the companies when they are not similar and this fact was also explained to the Assessing Officer in details during the assessment proceedings. The appellant further argues that while calculating net margin the Assessing Officer has ignored the other income while data provided of other companies, it appears that they are inclusive of other income and the appellant was ignorant about this fact. It is also submitted by the appellant that the Assessing Officer has not taken cognizance of the detailed working of FAS Analysis even though it was submitted by the appellant." 4. The submissions of th....
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....ppellant is not making any profit in its entire operation with the parent company. Once export incentive and other income are taken out, there is a loss of about 3.21%. Therefore, the conclusion of the Assessing Officer that the pricing of the product is not at arm's length price is a logical and defendable conclusion. 6.2 As has briefly already discussed the appellant is manufacturing a part or components of a product for the parent company. For this no direct comparable are available. Neither the appellant is able to find one. Therefore, the only logical way is to adopt net margin method to determine whether appellant is making any profit in this transaction. The Assessing Officer has precisely done the same thing. 6.3 The objection....
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....ued that Ld. CIT(A) has erred in confirming the action of the A.O. on account of upward adjustment in international transaction on the gourd that similarly placed companies have better margin as compared to the assessee company. The companies which were selected by the A.O. are not comparable with the assessee company as the size of the company, infrastructure, turnover and full data of the company was not provided to the assessee company to rebut the findings of the A.O. Most of the companies referred for comparison with the assessee company were not even dealing in the goods in which assessee company deals. Ld. counsel for the assessee further argued that Ld. CIT(A) was wrong in not considering the other income of the assessee company mai....
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....uring equipments and machinery parts and components of solid operating equipments and parts used in oil and gas filled machinery. The assessee does not supply any complete component but only spare parts are being manufactured and supplied through its holding company. 9. As the assessee's major sales in international market related to associate enterprise section 93E was applicable and a report in Form 3CEB was duly filed along with the return of income by the assessee. The A.O. invoking the provisions of section 92C(3) of the Act made addition of Rs. 19,72,697 by making upward adjustment in international transaction with the associate enterprise on the ground that similarly placed companies had better margins as compared to the assessee ....