TaxTMI 
TaxTMI 
2019 (11) TMI 360
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.... and are being disposed of by this common order. 2. The grounds raised by the Revenue are as under:- "1. The ld. CIT(A) has erred in law by considering the proportionate difference for purpose of calculation of +/- 5% benefit as against the actual difference between the Arms Length Price determined and amount shown in the books of accounts. The Ld. CIT(A) has inadvertently taken the differential figure i.e. 3.56 % based on working of Rs. 4,10,82,956/Rs. 1,06,25,38,120*100 =3.86 % which is less than 5% instead of correct and appropriate figure of 10.44 % based on working of Rs. 11,09,72,200/Rs. 1,06, 25, 38, 120*100 = 10.44 %." 2. The appellant craves to amend, modify, alter, add or forego any ground(s) of appeal at any ....
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....-0.47 Assessee vi. K R Rubberite Ltd. 4.42 Assessee vii. Rasandik Engineering Ind.India Ltd 8.24 Assessee viii. Schrader Duncan Ltd 2.47 Assessee ix. Triton Valves Ltd 9.66 Assessee X. Upasana Engineering Ltd 0.86 Assessee xi. Vaid Elastomer Processors Pvt. Ltd. -25.3 Assessee xii. Alpha Toyo Ltd. 2.8 Assessee xiii. Adroit Industries (India) Ltd. 19.15 TPO xiv. Banco Products India Ltd. 24.74 TPO XV. Kar Mobiles Ltd. 6 TPO xvi. Rane Engine Valves Ltd. 5.3 TPO xvii. Raunaq Auto Components Ltd. 6.77 TPO xviii. Brakes India Ltd. 7.75 TPO xix. ANG Industries Ltd. 4.1 TPO xx....
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....rom record, filed a rectification application u/s 154 of the Act. As per the original order, the TPO had made adjustment of difference between total ALP of Rs. 2,75,91,27,800/- and total operating cost of Rs. 28,70,10,000/- which is incorrect as per the provisions of section 92 of the Act. It was argued before the TPO that TP adjustment should be proportionate of international transaction of manufacturing segments. It was accordingly requested to TPO to rectify the mistake. The TPO vide rectification order dated 16th July, 2014 passed u/s 154/143(3) reduced the transfer pricing adjustment from 11,09,72,200/- to Rs. 6,58,73,098/-, the working of which is as under:- Particulars (related to manufacturing segment Amount in INR Referenc....
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....e CIT(A), it was argued that the adjustment in manufacturing segment in ALP comes to Rs. 4,10,82,956/- which is also 3.87% of the total international transaction of manufacturing segment which is as under:- 4,10,82,956 = 3.87% 1,06,25,38,120 9. It was accordingly requested that no adjustment is required to be made while determining the ALP of the international transaction as per the first proviso to section 92C(2) of the IT Act. In appeal, the ld. CIT(A) allowed the appeal of the assessee by observing as under:- "7. Decision:- I have considered the assessment order, order u/s 92CA(3) passed by the TPO and the subsequent rectification order passed by the TPO on 19.08/2014 and 12.03.2015. Without giving into the merits of....
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....n order dated 16.07.2014 which has been finally computed to 37.02% in the rectification order dated 12.03.2015. By applying the proportionate difference required to be made the TPO is basically making adjustment on the operating cost relatable to the manufacturing segment. The total final adjustment in ALP relatable to manufacturing cost is Rs. 4,10,82,956 on the total operating cost to the manufacturing segment amounting to Rs. 106,25,38,120 ratio (Rs. 4,10,82,956/ 106,25,38,120 X100) which comes to 3.86% which is less than 5% of the base figure of operating cost. The Ld. TPO has rejected the rectification application on the issue of adjustment +-5% as per second proviso to sub-section (2) of section 92C on the ground that these mistakes r....
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....ernational transactions being less than 5% of the total international transactions is deemed to be at ALP as per second proviso to sub-section (2) of section 92 of the IT Act. We, therefore, do not find any infirmity in the order of the CIT(A) in directing the A.O./TPO to delete the addition. The ground raised by the Revenue, in our opinion, is without any merit. The various decisions relied on by the ld. counsel also support its case that TP adjustment made under TNMM is not warranted when the value of the international transaction of purchase of raw material and the proportionate arm's length operating cost falls within the +/- 5% arm's length range. We further find that the TPO in the instant case has passed rectification order twice ....