2015 (9) TMI 644

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....e facts of the case are that Exxon Mobil is a multi-national group of companies engaged in oil and gas industry. It conducts business in almost 200 countries. Its major business is to discover, access, develop, refine and market oil and gas resources. The assessee, an Indian company, is part of this group, which conducts market survey activities and renders related advisory services to its associated enterprises (AEs). Four international transactions were reported by the assessee in its Form No.3CEB. The only international transaction disputed in the present appeal is 'Conducting market survey activities and related advisory services' for which the assessee was paid Rs. 4,89,60,262/-. The other three international transactions were accepted....

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....teration. 5. The assessee filed a rectification application before the TPO, urging that the correct OP/TC margin of EIL was 6.98% and the same be taken. The TPO rejected this contention on the ground that the assessee had itself worked out the profit margin of EIL at 37.41% for the current year. The same issue was espoused before the ld. CIT(A), arguing that the OP/TC of EIL should be taken at 6.98%, as was demonstrated by the assessee through Annexure-I filed along with rectification application. The ld. CIT(A) concurred with the submissions advanced on behalf of the assessee and ordered for the adoption of OP/TC of EIL at 6.98%. After considering the fact that the resultant average margin of the eight companies, with new margin of EIL ....

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....nding that it should be substituted with a correct figure. The appropriateness of such a contention, if made, needs to be judged at the end of the Revenue, without rejecting it at the outset. Precisely, this is the argument which was raised by the assessee before the TPO in rectification proceedings asserting that the OP/TC of EIL at entity level should be correctly taken at 6.98% instead of 37.41% shown in its TP study. The ld. CIT(A), was albeit right in accepting this argument for evaluation, but appears to have been swayed by the delineation of the correctness of this figure, without either independently properly examining the same at his end or obtaining a remand report from the AO/TPO on this aspect of the matter. An analysis of the P....

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....are liable to be excluded. At this stage, one needs to appreciate the difference between the operating profit and net profit. Whereas, operating profit is excess of operating revenue over operating costs, net profit encompasses the effect of both the streams, viz., operating and non-operating. Revering to the operating profit, it represents the difference between the operating income and operating expense. The argument of the ld. AR for adoption of operating income, also extends with full vigor to the expense side. In other words, not only the non-operating items of income are required to be excluded, but the items of non-operating expense should also be expelled from the calculation of the operating profit of a company. Ignoring the items ....