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TMI Blog2018 (4) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee’s claim is found to be correct no addition on account of transfer pricing adjustment should be made. With the aforesaid observations, the ground is allowed for statistical purposes. Increase the value of opening stock of current year on account of addition made to closing stock being unutilized modvat credit - Held that:- Hon'ble Jurisdictional High Court in CIT v/s Mahalaxmi Glass Works Ltd. [2009 (4) TMI 182 - BOMBAY HIGH COURT] as per section 145A of the Act, if there is any change in the closing stock at the end of the year then there must necessarily be a corresponding adjustment made in opening stock of that year. - Decided against revenue - ITA no.7220/Mum./2016, ITA no.6885/Mum./2016 - - - Dated:- 21-2-2018 - Shri Sak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Interest on ECB loan 0.14 TNMM/CUP 5. ECB received 18.75 Total: 61.97 5. From the transfer pricing study of the assessee, the Transfer Pricing Officer found that the assessee had adopted Transactional Net Margin Method (TNMM) as the most appropriate method to bench mark its international transaction. It has selected itself as tested party and applying Profit Level Indicator (PLI) of PBDIT / sales has worked out its margin at entity level of 0.98%. Since, the arithmetic mean of the six selected comparables was within the tolerance range of margin shown by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s purchase of automotive parts being within the range of 5% of the arm's length price determined by the Transfer Pricing Officer, no adjustment should have been made. However, the aforesaid ground raised by the assessee did not find favour with the first appellate authority who held that assessee s claim cannot be accepted. 7. Learned Authorised Representative submitted before us that the assessee has shown the value of disputed international transaction with A.E. at ₹ 40.24 crore. Whereas, the Transfer Pricing Officer has determined the arm's length price of the transaction with A.E. at ₹ 38.32 crore. Therefore, the variation between the price paid by the assessee to the A.E. and arm's length price determined by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions contained under the second proviso to section 92C(2) of the Act. 9. Learned Departmental Representative, though, agreed in principle that in terms with second proviso to section 92C(2), no adjustment is required to be made if the difference in the price shown by the assessee and arm's length price determined is within 5% as applicable for the relevant period, however, the Assessing Officer / Transfer Pricing Officer may be directed to verify the computation furnished by the assessee and decide the issue in terms with the said provision. 10. We have heard rival submissions and perused material available on record. As per the facts emanating from record there is no dispute that the price of the international transaction wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Revenue is as under: On the facts and in the circumstances of the case and in law, the learned Commissioner (Appeals) erred in directing the A.O. to increase the value of opening stock by Rs. 1,90,66,965 on account of addition made to closing stock for A.Y. 2010 2011 being unutilized modvat credit which is contrary to the direction given by CIT(A) to A.O, to determine the value of opening stock purchase sales and closing stock as per provision of section 145A of the Act, while deciding ground number 2. 13. Brief facts are, during the assessment proceedings, the Assessing Officer noticing that there is closing balance of unutilized MODVAT credit of ₹ 1,73,52,615, called upon the assessee to explain why it should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing adjustment of modvat credit of ₹ 1,73,52,615 to the value of closing stock. Thus, this ground of appeal is treated as allowed. 15. We have heard rival submissions and perused materials available on record. Undisputedly, in assessment year 2010 11, the Assessing Officer has disallowed unutilized MODVAT credit of ₹ 1,90,66,965 and added to the closing stock of the impugned assessment year. It is held by the Hon'ble Jurisdictional High Court in CIT v/s Mahalaxmi Glass Works Ltd., ITA no.192 of 2009 dated 1st April 2009, as per section 145A of the Act, if there is any change in the closing stock at the end of the year then there must necessarily be a corresponding adjustment made in opening stock of that year. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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