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2021 (4) TMI 255 - AT - Income TaxTP Adjustment - short-fall of adjustment under Section 92CA - rectification application moved by the assessee - HELD THAT - As TPO has passed an order under Section 154 of the Act on 29.08.2019 wherein it is held that now short-fall of adjustment under Section 92CA is only ₹ 38,74,748/-, which is less than 5% of the international transaction i.e. ₹ 88,36,598/- and, therefore, no adjustment is warranted. As the ld. TPO himself based on the order of the ld. CIT (Appeals) has rectified an error and has stated that no adjustment is proposed, appeal of the assessee becomes infructuous and hence dismissed. Selection of comparable TSR Darashaw Ltd. - The difference of adjustment on account of the same results into the total tax effect of ₹ 34,36,924/- which is less than the minimum tax sum for which the Revenue should prefer an appeal before the ITAT, hence the appeal of the Revenue, being low tax appeal, is dismissed.
Issues:
Cross appeals filed by assessee and ACIT against CIT(A) order for AY 2010-11. Analysis: 1. Facts of the Case: The assessee, a subsidiary of a US company, provided pre-sales and post-sales support services to its Associated Enterprises (AEs) in Israel, US, and UK. 2. Transfer Pricing: The assessee entered international transactions referred to the TPO for determining the Arm’s length price. The TPO rejected comparables chosen by the assessee and proposed an adjustment under Section 92CA. 3. Assessment and Appeals: The AO passed an order determining the taxable income and the assessee appealed before CIT(A). The CIT(A) directed exclusion of certain comparables, leading to appeals by both the assessee and the Revenue. 4. Arguments and Findings: The assessee argued that after considering revised comparables, no adjustment was warranted as the difference was within the +/- 5% range of the international transaction. The Revenue challenged the exclusion of a comparable and the total tax effect. 5. Judgment: The ITAT considered the contentions and orders of lower authorities. The TPO rectified the adjustment amount based on CIT(A) order, resulting in no adjustment for the assessee. The Revenue's appeal was dismissed due to the low tax effect. 6. Conclusion: Both appeals were dismissed as the TPO rectified the adjustment for the assessee, and the Revenue's appeal had a low tax effect.
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