2015 (6) TMI 243

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.... the Ld. CIT(A) has erred in deleting the addition of Rs. 1,87,53,644/- made on account of adjustment of arm's length price. 2. The appellant craves leave to add, alter or amend any ground of appeal raised above at the time of hearing. 2. The brief facts in this case are that the assessee is a 100% subsidiary of Federal Mogul Pty. Ltd., Australia. Federal Mogul Corporation US, is the parent company of the group. The assessee is in the Automobile ancillary business. The assessee is engaged in manufacturing the group's popular line of "champion spark plugs" and undertakes marketing and distribution operation for a wide range of group products including wiper blades, glow pugs, ignition coils, oil seals etc. The manufacturing facility of....

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.... Sharda Motor Inds Ltd. - 1,119,081,864 - Sona Somic Lemforder Components Ltd. - 281,417,651 - Victor Gaskets India Ltd. - 309,523,000 - Appellant 25,306,608 281,827,439 8.98%   As can be observed from the above, none of the comparable companies, except Kirloskar Oil Engines Ltd., has any provision for stock obsolesce / non moving inventory. Further, for Kirloskar Oil Engines Ltd., the provision for stock obsolesce / non moving inventory is only 1.03% of sales as against a similar provision of 8.98% for the Appellant. If provision of stock obsolesce / non moving inventory is considered as non operating expense for the comparable companies and the Appellant, then the analysis is a....

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.... same treatment to both sides of the equation; on the one hand it is the tested party i.e. assessee and on the other hand it is the comparables. As can be seen from the calculation above, margin of the assessee is above that of the comparables. Therefore, the AO is directed to delete the additions made on account of transfer pricing adjustment. Since the assessee's ALP is above the margin of the comparables proviso to section 92C(2) is not applicable in this case." 5.1. From the above finding of the Ld. CIT(A), we find no infirmity in the same. The assessee in this case has created a provision for obsolete stocks. Admittedly, such the provision for obsolesce stock has not been made by any of the companies, which are taken as comparabl....