2013 (5) TMI 906

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....dra Singh, A.M. This appeal by the revenue is directed against the order dated 17.8.2011of CIT(A) for the assessment year 2007-08. The only dispute raised in this appeal is regarding deletion of the transfer pricing (TP) adjustment made by AO amounting to Rs. 8,96,69,219/- 2. The facts in brief are that the assessee who was engaged in the business of manufacturing and sale of jewellery and d....

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....margin of the comparables in the same business on operating cost was 7.78%. TPO noted that the total sales shown by the asseessee was Rs. 213 crore on which operating profit was shown at Rs. 3.43 %. He, therefore, deducted the operating margin from sales to arrive at the total cost of sales at Rs. 206 crore. The TPO then computed arms length profit at the rate of 7.78% which gave the figure of 16.....

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....inted out that the TPO had made adjustment on the basis of operating profit computed with respect to entire operating cost using the PLI of 7.78% which was not correct. It was submitted that adjustment could be made only in respect of operating cost in relation to the AE sales. It was argued that even using the PLI of 7.78% no adjustment is required to be made if the arms length price of AE sales ....

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....ntions carefully. The dispute is regarding TP adjustment made by AO in relation to the sales made by the AE to associate enterprise. The assessee had total sales of Rs. 2,13,30,58,331/- out of which export to the AE's was Rs. 71.26 crore. Similar export sales in respect of non AE parties were 4.96 crore. The operating margin in case of AE sales was 6.75% compared to margin of 4.23 % in case of non....