AI Drafter 
TaxTMI 
TaxTMI 
2012 (3) TMI 577
X X X X Extracts X X X X
X X X X Extracts X X X X
....nd circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition on a/c of difference of Arm's Length Price. 3. On the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in not affording any opportunity to the TPO before proceeding to compute the margins of the comparables and the assessee. 4. On the facts and circumstances of the case and in law, the Ld.CIT(A) has erred in not considering service income & commission income as operating income specially when entity level margins of the comparable companies are being considered. 5. On the facts and circumstances of the case and in law, the Ld.CIT(A) has erred in not considering segmental accounts of healthcare divisio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....54/- in the following terms:- "It is seen that in the case of the assessee, the operating profit earned on total cost is calculated as under from the audited financials. As the assessee could not justify its operating profits deduced in Appendix B of the Transfer Pricing Report, figures from audited financials have been taken and other income has been considered as non- operating income. [In Rs.] Total Op. Income. 18,67,82,237 Materials and related expenses 14,23,21,068 Personnel expenses 1,65,98,619 Selling & Distribution expenses 1,12,58,859 Administration & other expenses 2,43,85,453 Depreciation 11,26,404 Total Operating expenses 19,56,90,403 Operating profit - 89,09,....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 3 Interest payable on loan 1145818 256686 889132 28.87 101873739 22821754 The Assessing officer shall increase the income of the assesseecompany by Rs. 2,28,21,754/-." 2.3 After receipt of report of the TPO, the AO allowed an opportunity of hearing to the assessee .In response, the assessee merely submitted a letter dated 8th September, 2008 filed before the TPO. Since the said reply had already been considered by the TPO, the AO added an amount of Rs. 2,28,21,754/- in terms of order dated 25th September, 2008 u/s 92CA(3) of the Act of the TPO. 3. On appeal, the ld. CIT(A) adjudicated the issues in the following terms:- "7. From the above grounds follo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n functions performed, assets employed and risk assumed based of two comparable which were initially selected by the TPO has been retained as final comparable. 11. On the basis of the final selection of two comparables, the mean of their operating profit earned on total operating cost based on data for the financial year 2004-05 will be compared with that of the assessee company to determine the arm's length price in regards to international transactions undertaken by the assessee for the assessment year 2005-06. During the course of appellate proceedings, it was also found that, the TPO has calculated the net profit margin by taking OP/TC as the profit level indicator by accepting TNMM as the most appropriate method. Since neither....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... No.9 By computing the adjustments to the income as provided in the proviso to section 92C(2) of the Act, the appellant fully satisfy the arm's length principle envisaged under the Act. Hence, the arm length price (ALP) worked out by appellant has been accepted and no adjustment is required. The impugned disallowances of Rs. 2,28,21,754/- is deleted. 13. Whether penalty u/s 271(1)(c) and 271G could be impugned: As the assessee has already furnished all the details and information's of its expenditures and as well as income in its return, and in form number 3CEB, and further transfer price study report which details and information's in themselves, were not found to be inaccurate nor could be viewed by the Assessing Officer as....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pportunity to the Assessing Officer/TPO .After discussion, both the parties agreed that matter may be restored to the file of the ld. CIT(A) for readjudiaction after allowing sufficient opportunity to the TPO/AO . 5. We have heard both the parties and gone through the facts of the case. Indisputably, the ld. CIT(A) considered additional material in relation to two comparables and that of the assessee, which was not available before the TPO/AO. Apparently, the ld. CIT(A) did not follow the procedure laid down under Rule 46A of the IT Rules,1962 nor allowed any opportunity to the AO. The powers of the CIT(A) to admit additional evidence are not only in situations where the evidence could not be produced before lower authorities owing to la....