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TMI Blog2013 (1) TMI 806X X X X Extracts X X X X X X X X Extracts X X X X ..... peal. The first five grounds are against the addition made by the AO pursuant to the adjustment proposed by the Transfer Pricing Officer (TPO) in respect of international transactions. 3. Briefly stated, the facts of these grounds are that the assessee is engaged in the manufacturing and export of studded precious jewellery. It reported international transactions of purchase and sale of studded jewellery. The benchmarking was done on the basis of Cost Plus method. For the reasons given by the TPO in his order dated 29.10.2009, the Cost plus method was rejected and instead the Transactional Net Margin Method (TNMM) was applied. In so applying the method of TNMM, the TPO worked out the assessee's Operating Profit / Total Cost (OP /TC) at 1.7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ermined by the TPO and second the rate of 4.79% computed by the TPO of the comparable cases chosen by him should be applied only in respect of the international transactions with the AEs. We will take up both these objections one by one for discussions and our conclusion thereon. 5. The first objection is against the inclusion of figure of closing stock in the total income of Rs. 216.67 cores. Before we proceed further on this issue it is relevant to note that under the TNMM, the operating profit margin is computed in relation to one of the several basis givens, such as Cost incurred or Sales effected or Assets employed or Any other relevant base. This is the prescription of 10B(1)(e) of Income-tax Rules, 1962. Only one of such bases is ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ducing the correct figures of either total cost or the sales, being the possible constituents of PLI, we set aside the impugned order and restore the matter to the file of AO / TPO to determine the rate of assessee's operating profit margin by applying correct base of Total Cost. Needless to say the same base as applied by the AO / TPO for determining the rate of OP/TC shall be applied in comparable cases also to find out the profit rate for the purposes of benchmarking. 6. We consider it our duty to record that the ld. AR has neither raised any objection to the application of TNMM as the most appropriate method nor to the selection of comparable cases as chosen by the TPO. 7. The second objection taken by the ld. AR is about the applicat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IC dues amounting to Rs. 28,986/- paid beyond the due date under respective Acts but before the due date of filing the return of income under section 139 of the Act. 10. After considering the rival submissions and perusing the relevant material on record it is observed that the due date for filing the return of income by the assessee under section 139(1) for the relevant year is 30.11.2006. The AO has drawn a chart at page-4 of the assessment order showing the dates of actual deposits and due dates for the said contributions of EPF and ESIC. The Hon'ble Supreme Court in the case of Alom Extrusions Ltd., (2009) 319 ITR 306(SC) has held the amendment to the first proviso and the omission of the second proviso to section 43B by the Finance Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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