2018 (3) TMI 1816

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....Rs. 79,67,93,400/- made by the TPO/AO on account of transfer pricing adjustment."   3. Facts related to the issue under consideration are that the assessee is a listed Indian Public Limited Company. It was engaged in the business of manufacturing/sale of consumer durables/home appliances namely, refrigerators, washing machines, micro wave, air conditioners etc. The assessee filed the return of income on 29.10.2004 declaring a loss of Rs. 63,36,09,640/-. Later on, the case was selected for scrutiny. The assessee in Form No. 3CEB reported 12 different international transactions undertaken with its Associated Enterprises (AE) and the pricing methods adopted to determine and benchmark the Arm's Length Price (ALP) of such international tra....

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.... dated 13.12.2006 recommended additions of Rs. 79,67,93,400/- being difference between the margin from ALP from international transactions entered into by the assessee company with its associated enterprises.    5. The AO asked the assessee to show cause as to why the addition recommended by the TPO should not be added to its income. In response, the assessee submitted that the TPO failed to understand and appreciate the diverse nature of business of the assessee and had aggregated the manufacturing and trading function together to determine the Arm's Length Price from the international transactions. It was further stated that the TPO's order was based on the preceding assessment year's transfer pricing order, without considering....

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....the comparable companies and accordingly, 0.5% adjustment of profit was allowed on ad-hoc basis towards working capital adjustments. It was also observed that in the subsequent assessment years 2005-06 and 2006-07, the TPO had allowed working capital adjustments claimed by the assessee and since the department had accepted the allowance of difference in the level of working capital and adjustment thereof, it would be appropriate to allow the same to the assessee. The ld. CIT(A) reproduced the computation of adjusted margins of the comparables as furnished by the assessee as under: s No. Name of the Companies Basis OP/OR (%) before WC adjustment WC adjusted OP/OR(%) 1 Blue Star Ltd Segment Result -1.52 -1.52 2 Salora Internati....