9911796707
TMI Blog2009 (6) TMI 125X X X X Extracts X X X X X X X X Extracts X X X X ..... Indian automobile industry. Its operations comprise of manufacturing of manual rear view mirrors which are supplied in the domestic market to car manufacturers such as Maruti, Ford, Toyota, Hyundai, etc. and cable assemblies which are exported to the group companies worldwide. 2.2 The Schefenacker Group companies have provided SML with technical information, know-how for the design and manufacturing of rear view mirror and related cable assemblies, and the required technologies and logistics support by way of technical engineering instructions, technical training, quality control, etc. 2.3 The taxpayer's associated concerns are responsible for complex product development, R&D, quality standards and processes, marketing and brand building and also for developing relationships with various OEMs and thus enjoys significant brand equity in the global markets. 2.4 A new plant was set up at Chennai in July, 2002 by taxpayer SML to manufacture/assemble door handles and T-Gate besides the existing product lines for catering to Hyundai India. 3. The taxpayer SML filed with return of income, a transfer pricing report (TP report) which revealed that the taxpayer had carried in the relevan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng data for financial years 2001-02 and 2002-03. Taxpayer's cash profit/sale of the financial year 2002-03 was shown at 8.85 per cent. Since the margin of profit of the taxpayer was higher than the average arithmetic mean of nine comparable companies, the TP report claimed that the taxpayer had satisfied arm's length standard set under the Indian TP regulations relating to transactions of import of raw material, export of finished products and payment, of royalty. The TP report also stated that since cost recharges by the taxpayer to its associated companies represented actual cost incurred, supported by third party bills, the transactions independent of TP analysis satisfied arm's length standard. TPO's reasons for rejecting PLI of cash profit/sales 4. The Transfer Pricing Officer (TPO) to whom reference was made by AO raised objection on the selection of PLI by the taxpayer's auditor. He rejected TP analysis furnished by the taxpayer as not conforming to r. 10B of Indian IT Rules. Reasons for adapting above course are extracted below: "(a) In computing the PLI under TNMM, the taxpayer does not have any choice regarding the numerator used in the ratio, though the denominator c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itative filter of ratio between depreciation and total cost to the nine selected comparables of the taxpayer and worked out percentage of depreciation to total cost as per table below reproduced from CIT(A)'s order: Table 3 in CIT(A)'s order -------------------------------------------------------------------- Sl. Name Depreciation Total cost % of No. (in Rs. (in Rs. depreciation crores) crores) in total -------------------------------------------------------------------- 1.&nbs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sp; 0.47 20.02 2.34 -------------------------------------------------------------------- 5. In the light of provisions of r. 10C(2)(d) of the Rules, the TPO concluded that since no accurate adjustment could be made to account for different levels of capacity utilization, selection of comparables themselves have to be made on the basis of similar ratio of depreciation to total cost. Accordingly, the following 3 comparables (Table 4) which had somewhat similar ratios of depreciation to total cost as of the taxpayer, were selected as final comparables for finding mean operating margin of profit which was taken at 6.66 per cent as under: Table 4 from CIT(A)'s order ---------------------------------------------------------------- Sl. Name % of OP TC PLI No. &nbs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsp; = 14,41,084 ---------------------------------------------------------------- Operating profit at arm's length margin (6.66%) = 1,30,44,088 ---------------------------------------------------------------- Adjustment to the operating profit (Rs. 1,30,44,088 - Rs. 14,41,084) = 1,16,03,004 ---------------------------------------------------------------- 5% of international transaction = 28,91,857 ---------------------------------------------------------------- 5.2 The TPO has further observed that the taxpayer during the financial year 2002-03 made both transactions of sale and purchase with its AEs. Since PLI has been taken as the ratio between the net operating profit margin and the total cost incurred and purchases had been included in the total cost, no adjustment was being made to the total cost as it would skew the PLI. Accordingly, the TPO held that adjustments were being made to the transactio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TNMM 91,743 -------------------------------------------------------------- 5. Recharges CUP 17,30,000 -------------------------------------------------------------- A similar TP report for asst. yr. 2004-05 6. The AO again made reference under s. 92CA(1) of the Act to the TPO for computation of ALP in respect of above international transactions. Vide order de 22nd Nov., 2006, the TPO proposed adjustment of Rs. 1,10,96,223 to international transactions of purchase. In its comparative analysis, taxpayer's auditor had focused on operative results of comparable companies for the period 1st April, 2001 to 16th Feb., 2004. The other quantitative filters adopted in the process of selection of comparables are detailed in paras 5.72 and 5.74 of TP report. As per TP report 15 companies were ultimately selected, 13 from prowess data ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in 1974 and was manufacturing air cleaners, head rests, seats and recliners. The TPO noted that profile of the assessee was quite different and 85 per cent of total sales related to rear view mirrors were made to top automobile companies and also exported. The TPO, accordingly, excluded above five companies. Computation of ALP by TPO 6.7 The TPO then proceeded to compute the ALP adopting ratio of operating profit to sales and by using data for the financial year 2003-04 for the remaining 10 selected comparables as detailed in Table 4 below: Table 4 -------------------------------------------------------------------- Sl. Company name Operating profit Sales for the OP/Sales No. for the financial financial year & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rasandik Engineering 25.01 136.16 18.36 Inds. India Ltd. (Prowess Database) -------------------------------------------------------------------- 9. Simmonds Marshall Ltd. 1.16 13.34 8.69 (Prowess Database) -------------------------------------------------------------------- 10. Tata Auto Plastic Systems 13.59 140.79 9.65 Ltd. (Prowess Database) -------------------------------------------------------------------- Arithmetical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ------------------------------------------------------ Net operating profit = 2,30,45,224 ---------------------------------------------------------------- Operating profit at arm's length margin (net sales * 0.111) = 3,41,42,147 ---------------------------------------------------------------- Adjustment to the operating profit (3,41,42,147 - 2,30,45,224)* = 1,10,96,223 ---------------------------------------------------------------- (*) There appears to be an arithmetical mistake in the calculation of TP adjustment as the correct amount is Rs. 1,10,96,923. Since the discrepancy is very nominal, the same is being ignored. 7.1 The TPO observed that the taxpayer made both transact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 157 : (2007) 288 ITR 52 (Del) by the learned CIT(A) to the facts of the case. Adoption of cash profit as PLI reagitated. CIT(A) not convinced 7.3 Learned representative of the taxpayer further challenged the computation of ALP by the TPO and PLI adopted by him. The learned CIT(A) did not accept the contention of the taxpayer that PLI under the TNMM could be cash profit/sales. He also held that there was no justification to exclude depreciation while computing net margin of the taxpayers and the comparables. In the light of proviso to r. 10B(4) of IT Rules, the learned CIT(A) held that data for carrying TP analysis has to be of current financial year as there was nothing on record to show that data of preceding two years had any influence on the determination of the transfer price in the year under consideration. After detailed discussion, the learned CIT(A) held, "I am of the considered view in the light of discussion in the preceding sub-paras that appellant as well as the TPO/AO committed errors in relying on prior years data for computation of PLI of the companies". Relevant data to be used for comparison was held to be data of current financial year 2002-03. On the main objec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evel production process. The same is true for the components as well. Therefore, keeping in mind the relative importance of the sale transaction made to the AE and the fact that the cost involving international transactions have bearing on the overall sales of the entity, the base of total cost is held to be the correct denominator. Accordingly, I am inclined to agree with the TPO/AO that OP/TC is the correct PLI for the benchmarking analysis. 5.5 In the light of the discussion in the foregoing paras, the comparability analysis is to be carried out by using the current financial year data of 2002-03, using OP/TC as the PLI. During the appellate proceedings, the appellant furnished the following information relating to computation of PLI of the nine finally selected comparables (Table 6) in the TP report. except for any information on Coventry Spring & Engineering Co. Ltd.: Table 6 ---------------------------------------------------------------- Sl. Name &nbs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -------- Mean 9.17% ---------------------------------------------------------------- Schefenacker Motherson Ltd. 0.14 19.58 0.74% ---------------------------------------------------------------- Exclusion of comparable and determination of ALP 8.3 The learned CIT(A) thereafter mentioned the characteristics required to be examined in selection of uncontrolled transactions or enterprises. He noted steps required to be taken for computing ALP. After analysis of comparables, the learned CIT(A) excluded Roto Pumps Ltd. as that company was engaged in manufacturing of progressive cavity pumps used in industries such as sugar, paper, agriculture, oil and gas, waste water treatment etc. The job profile of company was quite different. So was the case of Deniso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsp; 2.00 19.06 6.13% ---------------------------------------------------------------- Schefenacker Motherson Ltd. 0.11 19.58 0.74% ---------------------------------------------------------------- TP adjustments made by CIT(A) 8.4 Learned CIT(A) accordingly proposed TP assessment of Rs. 1,11,52,533 as per the following details: Table 9 ---------------------------------------------------------------- Computation of ALP of international transactions: ---------------------------------------------------------------- Total cost of the assessee company 19,58,57,185 -------------------------------------------------- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the TPO for rejecting taxpayer's claim which were quite similar to the reasons given for the asst. yr. 2003-04. These need not be repeated here. CIT(A)'s TP analysis 9.1 On facts and circumstances of the case, the learned CIT(A) rejected the use of multi years data as the same according to him was not permissible under r. 10B(4) of IT Rules. The learned CIT(A) also rejected argument of the taxpayer on under capacity utilisation for not considering depreciation. He held that the taxpayer has failed to give details of capacity utilisation of comparable cases. Taxpayer was also held to have failed to bring in TP report clear-cut distinctions and dissimilarities between the tested party and comparables, which needed adjustment. Similar reasons as have been noted for asst. yr. 2003-04 have been given for rejecting taxpayer's claim that cash profit to sales cannot be taken as PLI in the comparability analysis under TNMM. He held that comparative analysis was to be carried by adopting ratio of operating profit/total cost (OP/TC). The learned CIT(A) then considered 15 comparable companies giving mean profit of 9.40 per cent as per details below: & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nbsp; 5.96 105.74 5.64% (Capitaline Database) ---------------------------------------------------------------- 9. Phoenix Lamps Ltd. 18.55 147.41 12.58% (Prowess Database) ---------------------------------------------------------------- 10. Pricol Ltd. 58.78 364.09 16.14% (Prowess Database) ---------------------------------------------------------------- 11. Rasandik Engineering 5.73 118.49 4.84% Inds. India Ltd. (Prowess Database) ---------------------------------------------------------------- 12. Shardlow India Ltd. 2.02 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... --------------------------------------------------------------------- Sl. Name Observations on qualitative Remarks No. aspects --------------------------------------------------------------------- 1. Amforge Industries Ltd. 1. As per the annual report, Accepted by the (Prowess this company supplies TPO. Held not to Database) crankshafts to leading be a correct brands of cars and also comparable. supplier of connecting rods to leading branded cars. 2. The company is next to the industry leader Bharat Forge and poised to grow at much faster pace. 3. Capital expenditure plan is in place to capture available growth opportunities. 4. Initiative taken by the management resulted in a turnaround in financial years 2002-03 and 2003-04. --------------------------------------------------------------------- 2. Automobile Corpn Goa Ltd.. 1. As per the annual report, Accepted by the of the company had two TPO. Held not to (Prowess Database) divisions, sheet metal be a correct division and bus body comparable. building division. 2. One of the major customers for the sheet metal division is Tata Motors Ltd. Commercial vehicle segment experienced all round improvements in all parameters- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ----------------------------------- 1. Amforge Industries Ltd. 17.15 172.69 9.93% (Prowess Database) ---------------------------------------------------------------- 2. Bhagwati Autocast Ltd. 0.29 22.58 1.28% (Prowess Database) ---------------------------------------------------------------- 3. Bharat Forge Ltd. 197.85 709.86 27.87% (Prowess Database) ---------------------------------------------------------------- 4. E.L. Forge Ltd. 5.96 52.22 11.41% (Prowess Database) ---------------------------------------------------------------- 5. Phoenix Lamps Ltd. 18.55 &nbs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ------------------------------------------------- Total cost of the assessee company 28,45,41,694 ---------------------------------------------------------------- Operating profit 2,30,45,224 ---------------------------------------------------------------- Operating profit at arm's length margin (total cost * 1114) 3,16,97,945 ---------------------------------------------------------------- Adjustment to the operating profit (3,16,97,945 - 2,30,45,224) 86,52,721 --------------------------------------------- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12. Shri Ashok Mittal, learned senior Departmental Representative read out and relied upon orders of CIT(A). He submitted that in the impugned orders. the learned CIT(A) has elaborately discussed various issues and, therefore, it was not necessary for him to say anything or file any written submissions for which a specific opportunity was provided to the parties. He argued that the learned CIT(A) has given sound basis for computing ALP. The learned Departmental Representative also opposed request of the taxpayer to raise additional ground of appeal or file additional evidence. Finding of the Tribunal 13. We have given careful thought to the rival submissions of parties. Shri Mitra did not raise any of the technical objections on assumption of jurisdiction by the AO under s. 92 or on reference to TPO under s. 92CA of the Act as total value of international transactions exceeded Rs. 5 crores in both the years under appeal. It was also not disputed that comparables taken into account by CIT(A) were supplied by the taxpayer. It was submitted that the learned CIT(A) was in error in selection of comparables and inclusion of depreciation for computing net profit. In the light of subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annot become an obligation. It was accordingly held that the AO cannot grant depreciation allowance when the same is not claimed by the taxpayer. The Hon'ble Supreme Court approved similar view taken by different High Courts in India in large number of cases. It specifically confirmed the following decisions: (i) Beco Engineering Co. Ltd. vs. CIT (1984) 41 CTR (P&H) 249 : (1984) 148 ITR 478 (P&H); (ii) CIT vs. Andhra Cotton Mills Ltd. (1996) 133 CTR (AP) 398 : (1996) 219 ITR 404 (AP); (iii) CIT vs. Andhra Cotton Mills Ltd. (1998) 144 CTR (AP) 21 : (1997) 228 ITR 30 (AP); (iv) CIT vs. Friends Corporation (1989) 79 CTR (P&H) 181 : (1989) 180 ITR 334 (P&H); (v) CIT vs. J.K. Industries Ltd. (2000) 158 CTR (Cal) 17 : (2000) 241 ITR 537 (Cal); (vi) CIT vs. Shri Someshwar Sahakari Sakhar Karkhana Ltd. (1989) 75 CTR (Bom) 135 : (1989) 177 ITR 443 (Bom); and (vii) Chief CIT (Admn.) vs. Machine Tool Corporation of India Ltd. (1992) 108 CTR (Kar) 110 : (1993) 201 ITR 101 (Kar). Opposite view 16. The opponent of the above view while accepting that depreciation is a capital loss, justify its deduction, to replace the value of an asset to tl1e extent it has depreciated during the perio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n on certain assets for specified years. Under few provisions, depreciation is not deducted whereas generally it is deducted out of cost while working out "WDV" under tax laws. Obviously, such provisions under tax laws are made by way of incentives for setting new structures or new installations. Rates of depreciation also differ from asset to asset and from year to year. It is not necessary that allowance should match loss actually suffered in the relevant period. It is allowed as a fixed notional allowance. Principles governing "assessable" "commercial" or "operating" profit 16.3 Provision of a statute like Expln. 5 to s. 32 of the Act makes it compulsory to take depreciation into consideration in computing taxable profit (total income). Even in the case of the taxpayer before us for the two years under consideration, depreciation has been taken into account in computing its total income. Rs. 2,18,97,046 and Rs. 1,82,99,975 against Rs. 1,60,13,886 and Rs. 1,33,54,123 claimed in the P&L a/c have been allowed in asst. yrs. 2003-04 and 2004-05 respectively. In the first year, it has been allowed at a figure much higher than claimed in the P&L a/c. However, as at present, we are no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... venue's conclusion that operating profit or manufacturing cost must include "depreciation" irrespective of peculiar facts of case cannot prima facie be accepted as correct. If value of capital assets has got depleted then depleted value is to be taken into account to have commercial "true profit". Depreciation in such a case must be the actual value by which the asset has suffered depletion and not a notional amount under tax or company law or some policy or statutory provision. If any part of the amount claimed as depreciation does not represent the true amount of depreciation suffered, by plant and machinery or any other asset, then to the extent of such excess would only be the profit of the enterprise wrongly claimed as depreciation. It is nobody's case that depreciation in case of comparables or tested party was depreciation actually suffered and not depreciation claimed under artificial rules. Indian Transfer Pricing Regulations: 18. Having noted vicissitudinary nature of "profit" and its connection with "depreciation", we may now refer to Indian TP Regulation under which ALP is required to be determined to consider whether deduction of depreciation is imperative to comput ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thod -do- (d) Profit split method -do- (e) TNMM, by which.- (i) the net profit margin realised by the enterprise from an international transaction entered into with an AE is computed in relation to costs incurred or sales effected or assets employed or to be employed by the enterprise or having regard to any other relevant base; (ii) the net profit margin realised by the enterprise or by an unrelated enterprise from a comparable uncontrolled transaction or a number of such transactions is computed having regard to the same base; (iii) the net profit margin referred to in sub-cl. (ii) arising in comparable uncontrolled transactions is adjusted to take into account the differences, if any, between the international transaction and the comparable uncontrolled transactions, or between the enterprises entering into such transactions, which could materially affect the am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) 18.3 Under provisions of s. 92(1) of the Act and r. 10B, income of international transaction between associated concern is to be computed having regard to ALP. ALP, in turn, is the price which will be paid or charged by unrelated parties for a similar transaction in similar circumstances as are prevailing between related parties carrying international transaction. So an exercise is required to be carried to compare price charged or paid in a controlled transaction with price charged or paid in a similar uncontrolled transaction (i.e. a transaction between unrelated parties). In other words, controlled activities are compared with uncontrolled activities of independent parties. But comparison would serve its purpose only if transaction or entities under comparison are found to be similar or almost similar and this "almost" representing differences are evaluated and adjustments are made to bring transaction or enterprises to the same level. If a similar uncontrolled transaction is available for comparison, then ALP is determined by taking such price of similar uncontrolled transaction carried in similar circumstances. As similar transactions are not easy to find, and, therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... companies rules or as per policy of the company. In the case in hand. Revenue authorities went wrong in disregarding the context and purpose for which the "net profit" was to be computed. Depreciation, which can have varied basis and is allowed at different rates is not such an expenditure which must be deducted in all situations. It has no direct connection or bearing on price, cost or profit margin of the international transactions. Principles emphasized in the case of Bangalore Clothing by Bombay High Court are attracted here. Object and purpose of the transfer pricing to compare like with the like, and to eliminate differences, if any, by suitable adjustment is to be seen. Therefore, there was justification on the part of the taxpayer in pleading that profits be taken without deduction of depreciation as depreciation was leading to large differences in margins for various reasons. Guidance Note of ICAI accepts cash profit/sale as a base under TNMM 20. The taxpayer also relied upon para 22.4 of guidance note on transfer pricing issued by ICAI suggesting cash profit/sales as one of the ratios to be applied for computing ALP under the TNMM as per Indian Regulations. Sub-title ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the TPO had excluded certain comparables after noting differences in their year of start of operations. These were Bhagwati Autocast Ltd. (1982), Jay Ushin Ltd. (1986), Shardlow India Ltd. (1980) etc. Thus, age of plant/machinery and other related information is available on record and, therefore, contention of the taxpayer on differences in claim of depreciation is fully established on record. Further vast difference in depreciation is also evident from the following Table 3 showing comparison of percentage of depreciation to the total cost in accounts of taxpayer and comparables: Table 3 in CIT(A)'s order -------------------------------------------------------------------- Sl. Name Depreciation Total cost % of No. (in Rs. (in& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ---------------------------------------------- 9. Frontier Springs Ltd. 0.23 8.7 2.64 -------------------------------------------------------------------- 10. Bhagwati Autocast Ltd. 0.47 20.02 2.34 -------------------------------------------------------------------- 20.4 As against ratio of 8.17 per cent of the taxpayer, only Ring Plus Aqua Ltd. had the closest ratio of 8.45 per cent. Such ratio in other enterprises varied between 2.34 per cent to 5.99 per cent which is quite large having regard to mean margin which on cost is approximately 9 per cent only. Obviously there are differences between the machinery employed by the taxpayer and other comparable concerns which are reflected in amount and percentage of depreciation claimed. How this variation and difference could be ignored under TP Regulations is neither shown nor explained. The taxpayer has debited high amount/ratio of depreciation as per rules as it was fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s -------------------------------------------------------------------- Coventry Coil-O-Matic Coils 15.91 crores Ltd. -------------------------------------------------------------------- 20.5 It is more than 5 and 15 times of the taxpayer. Size of the assets besides the age of the assets of comparables was leading to difference in the profit margins and in mean margin. On the contrary, claim of depreciation is eating up large chunk of profit in the case of the taxpayer. How above differences were not considered in applying FAR analysis? The learned CIT(A) has not said a word on "asset" employed and "risks" suffered by the tested party and the comparables. Thus, material differences needing suitable adjustment were ignored and a flawed analysis was carried even in appellate proceedings. 20.6 The AO, after looking into details of financial results of comparable enterprises, excluded all companies except the three, although two of companies selected, namely Coventry Coil-O-Matic (Haryana) Ltd. and Roto Pumps Ltd. percentage of depreciation to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on, when made, the date and year of expansion, its comparability with taxpayer's case? Nothing relevant is stated in the impugned orders. We do not know how differences on account of depreciation could be ignored on the facts stated above merely on general observations that automobile ancillary industry is in the expansion phase. Taxpayer is seeking adjustment of differences on account of depreciation and no plausible reason has been given for not accepting this claim. There is no finding that there are no differences in claim of depreciation and, therefore, it should have been excluded in computing "operating profit" as warranted by rules. On the other hand, the differences as per the chart are accepted. The finding that cash profit cannot be considered is not legally correct. The taxpayer in order to get adjustment of difference in depreciation furnished arm's length working after excluding depreciation and by taking all other expenses into consideration and showed that such profit of the taxpayer was quite comparable to the mean margin of other comparables similarly computed. This demonstratively showed that deduction of depreciations was making huge difference and required suit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any adjustments in the two years is as under: Assessment year 2003-04 (Financial year 2002-03) --------------------------------------------------------------------- March, March, March, 2003 2003 2003 --------------------------------------------------------------------- Company name Reference Sales Total Operating &nbs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p; March, 2003 2003 2003 2003 2003 2003 2003 --------------------------------------------------------------------- Amortis- Deprec- Cash CP/Sales OP/TC Total cost CP/Adj TC ation iation profit excluding (CP) depreciation and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 9.79% 6.43% 12.28% --------------------------------------------------------------------- 1.60 1.75 8.85% 0.74% 17.98 9.71% --------------------------------------------------------------------- CP/TC : +/- 5% calculation (Amount in Rs.) Expenses excluding depreciation 17,98,43,306 ALP @ 112.28% 20,19,28,064 Applying proviso to s. 92C(2), i.e., 19,18,31,661 after adjusting 5% (95% thereof) Company's turnover 19,72,98,269 So, it is within ALP as per Sony India [Soni India (P) Ltd. vs. Dy. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsp; Page 609 907.71 709.86 197.85 --------------------------------------------------------------------- E.L. Forge Ltd. Page 676 58.18 52.22 5.96 --------------------------------------------------------------------- Phoenix Lamps Ltd. Page 772 165.96 147.71 18.55 --------------------------------------------------------------------- Pricol Ltd. Page 753 422.87 364.09 58.78 --------------------------------------------------------------------- Shard low India Ltd. Page 817 61.18 59.16 2.02 --------------------------------------------------------------------- Sim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sp; amortisation (Adj TC) --------------------------------------------------------------------- 2.23 4.35 23.73 12.50% 9.93% 166.11 14.29% --------------------------------------------------------------------- 0.01 0.54 0.84 3.67% 1.28% 22.03 3.81% --------------------------------------------------------------------- 3.86 45.77 247.48 27.26% 27.87% 660 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ------ CP/TC : +/- 5% calculation (Amount in Rs.) Expenses excluding depreciation 31,40,00,687 ALP @ 116.85% 36,69,09,803 Applying proviso to s. 92C(2), i.e., 34,85,64,313 after adjusting 5% (95% thereof) Company's turnover 35,21,22,794 So, it is within ALP as per Sony India and Development Consultants Thus, on figures and methodology adopted by learned CIT(A), with the exclusion of depreciation, we see that there is no case for making any adjustment. However, it is not clear from record whether above figures were verified by the Revenue authorities. Both the parties agreed that above figures and computations can be verified by the AO/TPO. We are also of the view that it would be appropriate to get above claim verified by the AO/TPO. Accordingly, we set aside the impugned orders of Revenue a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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