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TMI Blog2013 (5) TMI 277X X X X Extracts X X X X X X X X Extracts X X X X ..... plated under section 92B(1)& 92B(2) because none of the conditions stipulated therein of a prior agreement existing between the customers of the respondent/assessee and the associated enterparises have been established as a fact. Moreover, there is no finding that the terms of the transaction of installation/commissining as well as maintenance had been determined in substance between the customers and the respondent/assessee by the associated enterprise. In the absence of such findings, it cannot be deemed that the transaction of installation/commissioning as well as provision of maintenance services by the respondent to its domestic customers in India were international transactions falling within section 92B(2) of the said Act. No subs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... That appeal, has been dismissed by the Tribunal by virtue of the impugned order dated 30.04.2010. That is how the revenue is in appeal before us. 3. The respondent/assessee is a wholly owned subsidiary of Digital Microwave (Mauritius) Ltd. which in turn is a wholly owned subsidiary of Digital Microwave Corporation USA. The assessee is engaged mainly in the undertaking for installation, commissioning and maintenance of microwave link equipments. 4. There is no doubt that Digital Microwave Corporation USA is an associated enterprise of the respondent/assessee. All the equipments for microwave links are manufactured by the said associated enterprise. The orders in India for installation of those equipments are booked by the respondent/asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... compute the profit level indicator in respect of the international transactions of warranty services and commission income. What the Transfer Pricing Officer did was to include the operating revenue and operating cost of not only the warranty services and commission income but also the installation/commissioning and maintenance charges while computing the operating profit so as to determine the profit level indicator. This would be clear from the table as given below which has been re-produced from the Transfer Pricing Officer s report:- Computation of PLI of the Assessee During the course of proceedings the assessee has filed a detail of computation of net margin from various activities. The operating (revenue sic) and operating cost ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 16.34% Arm s Length Operating Profit Rs. 1,29,86,715 Difference being adjustment required Rs. 1,19,41,893 Accordingly, the adjustment of Rs. 1,19,41,893/- is required to be made value of International transaction related to commission on sales and warranty support services. The adjustment is being made proportionately to both the transactions. The arm s length price of these transactions is computed in following manner:- S.No . International transaction Value of international transaction Proportionate adjustment Arm s length price of international transaction 1 Warranty support service 2,32,37,906 72,95,302 3,50,33,208 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transactions. It is also evident that the Transfer Pricing Officer, himself, did not consider installation/commissioning and maintenance to be international transactions inasmuch as no adjustment was made by him in respect thereof. The adjustments made to the extent of Rs.. 1,19,41,893/- were only with regard to the value of international transactions relating to commission on sales and warranty support service. 9. Mr Sabharwal, the learned counsel appearing on behalf of the revenue submitted that there was nothing wrong in taking the operating cost and operating revenue of the installation and commissioning services as also the maintenance services while computing the profit level indicator because the said services were intricately con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Officer at 16.34%, which was lower. It is in this backdrop that the Tribunal felt that there was no reason to examine the issue on the argument of the assessee that the Transfer Pricing Officer had not applied the proper comparables while working out the profit level indicator of comparables. 10. From the foregoing discussion, it is evident that the transactions pertaining to the installation/commissioning and maintenance services were not international transactions as contemplated under section 92B(1). They were also not deemed international transactions under section 92B(2) of the said Act because none of the conditions stipulated therein of a prior agreement existing between the customers of the respondent/assessee and the associate ..... X X X X Extracts X X X X X X X X Extracts X X X X
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