2010 (1) TMI 806

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..... ernational transaction or a class of such transaction, but not operational margins of enterprises as a whole, TPO as well as the Assessing Officer have committed an error by wrongly applying Transaction Net Margin Method. appeal of the Revenue is dismissed.
J. Sudhakar Reddy, R.S. Padvekar, JJ. Aarsi Prasad for the Appellant Vijay Mehta for the Respondent ORDER J. Sudhakar Reddy, Accountant Member:- 1. This is an appeal filed by the assessee directed against the order of the CIT (Appeals)-XVII, Mumbai dated 16-4-2007 for the assessment year 2004-05. Facts in brief:- 2. The assessee is a partnership firm and is in the business of import and export of diamonds. During the year under consideration the assessee has entered into an in .....

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..... rejection of CUP Method by the TPO is not under challenge. On the contrary, he pointed out that the assessee had accepted that on the facts of the case, the assessee had committed an error in adoptingCUP Method. Now coming to the TNM Method, the learned DR submitted that the CIT (Appeals) has committed error in eliminating the highest comparables and not eliminating the lowest comparables. On a query from the Bench as to whether the Assessing Officer is authorised to adopt gross margins of one enterprises under TNM Method, the learned DR submitted that the transaction details were not available and under those circumstances enterprises level operating profits can be adopted. 4. The learned counsel for the assessee, Shri Vijay Mehta, on the .....

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..... rofit margin realised by the enterprise from an international transaction entered into with an associated enterprise 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-clause (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 ent .....

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