TaxTMI 
TaxTMI 
2012 (6) TMI 703
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.... It belongs to Huntsman Group. The return of income for the year under consideration was filed by it on 24-11-2006 declaring total income of Rs. 13,63,48,479/-. In the said year, the assessee had entered into cross border transactions with its associated enterprises exceeding Rs. 15 crores. A reference, therefore, was made by the AO to the Transfer Pricing Officer (TPO) to ascertain the Arms Length Price. The TPO found that the assessee company had imported finished goods from its associated enterprises for resale in India and in the transfer pricing report, it had sliced in the profit and loss account into manufacturing and trading and further into related and unrelated transactions for the purpose of benchmarking. For the purpose of slici....
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....H Trading Ltd., Hiran Orgochem Ltd., Indokem Ltd. and Nikhil Adecins Ltd. Since the arithmetic mean of the operating profit margins of the said comparables as worked out by the TPO at 2.76% was higher than the margin of (-) 0.24% worked out by him in the case of the assessee, adjustment of Rs. 8,56,37,000/- was proposed by him by applying the operating margin profit of 2.76% to the entire trading turnover of the assessee amounting to Rs. 285.22 crores. He also rejected the benefit of +/- 5% sought by the assessee in respect of adjustment in terms of proviso to section 92C(4) holding that the option under the said proviso was available to the assessee only in the case where variation in price is upto 5% as found from arithmetic mean. ....
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....d that the comparables selected by TPO were proper for arriving at a correct comparable margin. The DRP also did not find any merit in the objection of the assessee for TPO not allowing the benefit of +/- 5% factor holding that the adjustment proposed by the TPO was beyond the limit of +/- 5%. The DRP thus overruled all the objections raised by the assessee vide its order dated 15-07-2010 passed u/s 144C(5) and accordingly the assessment was finalized by the AO by an order dated 06-09-2010 passed u/s 143(3) read with section 144C(13) making addition of Rs. 8,56,37,000/-to the total income of the assessee by way of transfer pricing adjustment u/s 92CA(3). Aggrieved by the same, the assessee has preferred this appeal before the Tribunal. &nbs....
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.... back to the AO for verifying the stand of the assessee. As regards the other proposition argued by the learned counsel for the assessee that allocation of advertisement and sales promotion expenses among manufacturing and trading segment made by the TPO in the ratio of turnover is not proper and the same should be allocated only to manufacturing activity as done by the assessee, the learned DR has submitted that all the submissions made by the learned counsel for the assessee in support of this proposition are also required to be considered by the AO/TPO as the same appears to have not been done earlier. 7. As regards the third proposition of the learned counsel for the assessee seeking benefit of standard deduction of plus or mi....
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....r determining the operating profit to sales margin of the said comparables. Although the learned DR has agreed that apparently there are such mistakes, he has urged that this matter may be sent back to the TPO/AO for verifying the stand of the assessee that there are some mistakes inadvertently committed by the TPO while working out the operating profit margin of the comparable companies. 9. At the time of hearing before us, the learned counsel for the assessee has prepared and furnished a working showing the transfer pricing adjustment that is required to be made in different scenarios depending on acceptance of propositions put-forth by him. As pointed out by him on the basis of the said working, the transfer pricing adjustment ....