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TMI Blog2011 (12) TMI 178X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee had done international transactions with associated enterprises. The matter was, therefore, referred to the Transfer Pricing Officer (TPO), who following the TNMM method, computed the transfer pricing adjustment of Rs. 8,52,70,976/-. The assessee raised objection before the DRP regarding the TP adjustments, but the same was rejected and the adjustment proposed by the AO on the basis of order of TPO was upheld. The AO, therefore, in the final order dated 21.02.2010 made addition of Rs. 8,52,70,976/-, on account of TP adjustments. The AO also noted that the assessee for the relevant year had declared GP rate of 21.33% compared to 26.63% in the immediate preceding year. The assessee gave the following explanation for the fall in GP rate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee had reduced the profits by manipulating transactions with the associate enterprises (AE). The AO, therefore, rejected the books of accounts and adopted the G.P. rate as that of the preceding year, which resulted into an addition of Rs. 81,13,911/- to the total income. Aggrieved by the decision of the AO, the assessee is in appeal before the Tribunal. 4. Before us, the Ld. AR for the assessee argued that rejection of accounts by the AO was not justified, as there were no defects pointed out in the books of accounts. The AO had also not provided specific opportunity to substantiate the claim of increase in material cost and manufacturing expenses and the effect of foreign exchange fluctuation on the material cost. In any case, it wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n account of GP rate and TP adjustment made by the AO. In making TP adjustment, the AO has followed the TNMM method, about which there is no dispute. The dispute raised is only about not giving the benefit of 5% adjustment and making the adjustments in relation to the entire sales and not limiting to the transactions with the AE. The adjustments on account of transfer pricing are to be restricted only to the international transactions with the AE, and not to the entire turnover of the assessee as held by the Mumbai Bench of the Tribunal in case of Starlite (supra) and in several other cases. Similarly, in the pre 01.10.2009 position, the benefit of 5% is to be allowed to the assessee, even in cases where difference in value of international ..... X X X X Extracts X X X X X X X X Extracts X X X X
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