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TMI Blog2016 (2) TMI 874X X X X Extracts X X X X X X X X Extracts X X X X ..... .O. to apply the Second Proviso to S.92(2) of the Act and to exclude comparables having related party transactions in excess of 25% and to direct the AO to grant working capital adjustment, we hold that the assessee would be free to take up any legal argument or contentions before the A.O. The law with respect to transfer pricing has developed over the period of time and the assessee/revenue should not be deprived of taking benefit of the latest legal developments on any issue. The AO is directed to consider all these fresh contentions and arguments raised by the assessee and dispose of the same and arguments in accordance with law. The AO/TPO shall afford adequate opportunity to the assessee. - Decided in favour of assessee for statistical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... astructure and building; and push button equipments. The above activities of manufacture and trading constitute the core business activities of Schneider India. Further, during the impugned financial year, Schneider India has rendered the following IT related and other services to its overseas affiliates on a limited basis: they are E-services, implementation and development of ERP software packages (such as Scala, an accounting software package), research and development support activities; and business support services. 2.1. During the A.Y. 2005-06 the assessee was primarily engaged in the following business activities. (a) Manufacturing: Manufacturing and sale of low voltage and medium voltage equipment i.e. Air Circuit Break ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rred in relying on the interim/unaudited margins of comparables and not considering the audited financials while calculating operating margin for determination of arm's length price considering which Appellant will fall within the +/-5% range as provided under second proviso to section 92C(2) of the Act; 1.2. erred by selecting a comparable namely lndo Asian Fusegears Limited not having any income from manufacturing and trading operations in the relevant financial year; 1.3. erred by selecting certain comparables which have related party transactions of more than 25% of their turnover; and 1.4. erred in not allowing adjustment on account of customs duty paid by the Appellant and claimed before Ld. CIT(A). 2. On t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... II(2)), New Delhi) in respect of the Appellant's international transaction pertaining to provision of research development services and in doing so have inter-alia grossly: 4.1. erred in relying on the interim/unaudited margins of comparables and not considering the audited financials while calculating operating margin/return on cost for determination of arm's length price; 4.2. erred by selecting certain comparables which have related party transactions of more than 25% of their turnover; and 4.3. erred in not allowing benefit of + / - 5% range provided under second proviso to section 92C(2) of the Act. 5. On the facts and circumstances of the case, the Ld. CIT(A) has erred in adjustment of ₹ 12,05,6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... djustment while computing margins of the comparables; 10. On the facts and circumstances of the case, the Ld. CIT(A) has erred in ignoring the business/commercial reality that since the Appellant is remunerated on an arm's length cost plus basis, i.e. it is compensated for all its operating costs plus a pre-agreed mark-up based on a benchmarking analysis for services provided by it to its Associated Enterprises ('AEs'), the Appellant undertakes minimal business risks as against comparable companies that are full-fledged risk taking entrepreneurs, and by not allowing a risk adjustment to the Appellant on account of this fact. 11 . On the facts and circumstances of the case, the Ld CIT (A) has erred in disregarding the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stion, by taking into account audited financial statements. 6.1. He further pleaded that the TPO be directed not to make an adjustment, if the ALP arrived at by the assessee/T.P.O., after taking into account the audited financial statements, falls within the range of 5%, as provided under the Second Proviso to S.92C(2) of the Act. He further contended that comparables where related party transactions are more than 25%, should be directed to be excluded. Further he argued that working capital adjustment should be directed to be granted to the assessee. On a query from the Bench he submitted that he is not pressing ground nos. 1.2, 1.3 and 8 and that he is confining his arguments to the relief mentioned in these arguments recorded above. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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