2012 (2) TMI 172 - ITAT BANGALORE

Transfer pricing - What is the data to be considered by the TPO at the time of determining ALP - Whether the appellant should have been given an opportunity to refute the material sought to be utilized by the TPO – Turnover filter – deduction u/s 10A - Held that:-By providing a specified date in the Act, the obligation is cast upon the assessee to keep and maintain the documents for that period. But, it does not restrict the TPO from making enquiries thereafter for determining the correct ALP. TPO shall take into consideration the contemporaneous data.

TPO need not inform the assessee about the process used by him for issuing the notices u/s 133(6) nor is he under any obligation to furnish the entire information to the assessee. However, principles of natural justice requires that appellant has to be given a reasonable opportunity of hearing on that material. In present case, TPO had furnished all the information to the appellant, to which appellant has raised objections. Non- consideration of objections would be an error of judgment, but, not violation of principles of natural justice.

Turnover Filter - TPO considered turnover range of ₹ 1 crore to ₹ 200 crores and ₹ 1 crore to ₹ 500 crores – Held that:- Turnover of the company is in the range of 24 crores, therefore, the companies, which have turnover of ₹ 1.00 crores to 200 crores alone should be taken into consideration for the purpose of making TP study. Therefore, this issue requires to be remitted back to the file of the TPO for fresh consideration with directions in this regard.

Deduction u/s 10A - Held that:- While computing the exemption u/s 10A, if the export turnover in the numerator is to be arrived at after excluding certain expenses, the same should also be excluded in computing the export turnover as a component of total turnover in the denominator. See CIT v. Gem Plus Jewellery India Ltd.(2010 - TMI - 76903 - Bombay High Court ) - Decided partly in favor of assessee for statistical purposes.