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TMI Blog2015 (11) TMI 269X X X X Extracts X X X X X X X X Extracts X X X X ..... ed Assessing Officer has erred in adding C77,58,955/- towards adjustment in Arms Length Price, determined by TPO as per the orders of the latter dated 31.12.2012. 2.2 The learned TPO erred in determining Arms Length Price of the AE purchase at C37,13,20,434/- as against C37,90,79,389/- admitted by assessee. 2.3 The learned TOP erred in not correctly appreciating the contents of 2nd proviso and Explanation there under to Sec.92C.'' 3. The facts of the case are that the assessee for the assessment year 2009-10 had filed the return of ii electronically on 06.08.2009, declaring a total income of rs.40,88,900/-. The case was selected for scrutiny as the assessee international transactions with the Associated Enterprise (AE), the determinat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... As per the provisions of Sec.92CA(4), the Assessing Officer on receipt of order u/s.92C (3) computed the total income of the assessee under sub-section (4) of 92C. The Assessing Officer's computation of total income of the assessee is based on the Arms Length Price determined by the TPO and accordingly an addition of C77,58,955/- is made. As the Assessing Officer has followed the TPO order following the total variation on account of Gross Price difference based on individual comparison of transactions as computed by the TPO against the average monthly import price method followed by the assessee. However, as per the view taken by the TPO which was adopted by the Assessing Officer which arrived the difference of price variation at C77,58,95 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pinion, the second proviso to be read independently. The lower authorities instead of following above second proviso followed the first proviso. Being so, the Transfer Pricing Officer wrongly came to the conclusion that leverage of 5% is not allowable to the assessee's case where once price based on a particular method of arm's length price is not applicable. This view of us was also supported by the order of the Special bench in the case of M/s. IHG IT Services (India) Private Limited in ITA No.5890/Del/2010, Dated 30.04.2013. 7. Accordingly, we are in complete agreement with the claim of the assessee with regard to benefit for the adjustment of + 5% variation, while computing the arm's length price. This ground of the assessee is allowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing officer a few transactions related to unrelated parties as proof. However, the assessee has imported Raw Cashew at an average credit term of 150 days from the AE . The assessee did not avail any working capital loan from the Banks and the entire requirement of Working Capital was met by the Credit term extended by the AE. Accordingly the assessee has computed interest on all the import transactions at the Bank Rate of 12% on the credit term in excess of 30 days. Also as per the Industrial Norms the imports of cashew are being carried out only on immediate payment terms which can also be confirmed from the web site of Cashew Export Promotion Council. The Transfer Pricing Officer has totally ignored the interest on the ground that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessee availed 150 days credit for payment. Being so, the price was charged little more than the rate mentioned in the CEPC Journal (External data). If due credit is given to interest @12% for the credit period, there is no necessity for TP adjustment. This plea of the assessee is correct. In our opinion, due weightage is to be given towards interest benefit enjoyed by the assessee by availing credit for 150 days for payment and Rule 10B(1)(a)(ii) of the Income Tax Rules, 1962 also permits such benefit to the assessee. Hence, the lower authorities are not justified in making such adjustments. This ground is allowed. 12. In the result, all the grounds raised by the assessee in ITA No.2237/Mds/2013 are allowed. Order pronounced o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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