TaxTMI 
TaxTMI 
2014 (1) TMI 852
X X X X Extracts X X X X
X X X X Extracts X X X X
.... "1. For that the order of the is without jurisdiction, contrary to law, facts and circumstances of the case and at any rate is opposed to the principles of equity, natural justice and fair play. 2. For that the Assessing Officer erred in revising the Arms" Length Price in the case of the appellant and consequently making an addition of Rs. 4,11,00,000/- on this account. 3. For that the Assessing Officer failed to appreciate that when the Associated Enterprise of the appellant had itself made losses on its Indian transactions, it was clear that the appellant had not transferred profits out of India. 4. For that while determining the Arm's length price,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d that the provision was in the nature of finance charges and that therefore there was a need to adjust the same in arriving at the PLI. 8. For that consequently, the Assessing Officer erred in computing the PLI of the appellant company at - 3.54% instead of 3.88% as computed by the appellant company. 9. For that the Assessing Officer erred in not allowing adjustment of brought forward losses. 10. For that the Assessing Officer failed to appreciate that adjustment could only be made to the profit of the comparables and not to the profit of the appellant. 11. For these grounds and such other grounds that may be urged before or duri....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rables is 2.27% and the PLI of the assessee with AE is 1.13%, both being undisputed, the addable difference should be 1.14%. We accept this contention of the assessee. 5. When the difference is adopted at 1.14%, the adjustment to be made would be Rs. 1 crore. The AE turnover of the assessee is Rs. 87.78 crores. 1.14% of the above turnover is Rs. 1 crore. This is the amount to be adjusted. But, while making the computation, the authorities have added back the provision for outstanding derivative contracts. This provision is of Rs. 60 lakhs. It is very clear from the computation of the assessee that the said provision for outstanding derivative contracts was already added back in computing the total income of the assessee. Therefore, the f....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ted or assets employed or to be employed by the enterprise or having regard to any other relevant base. The rule has provided for the discretionary use of the cost inputs. It is in this context that one has to bear in mind that extraordinary items have to be excluded from the normal realm of computation for the purpose of comparison. Sub-rule (3) of Rule 10B further provides that an uncontrolled transaction shall be comparable to an international transaction if reasonably accurate adjustments can be made to eliminate the material effects of differences between the transactions being compared." 8. In view of the above, we have to see that the TPO ought to have considered the extra-ordinary items while finalizing the Arm's Length Price (AL....