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TMI Blog2019 (11) TMI 360X X X X Extracts X X X X X X X X Extracts X X X X ..... der. 2. The grounds raised by the Revenue are as under:- "1. The ld. CIT(A) has erred in law by considering the proportionate difference for purpose of calculation of +/- 5% benefit as against the actual difference between the Arms Length Price determined and amount shown in the books of accounts. The Ld. CIT(A) has inadvertently taken the differential figure i.e. 3.56 % based on working of Rs. 4,10,82,956/Rs. 1,06,25,38,120*100 =3.86 % which is less than 5% instead of correct and appropriate figure of 10.44 % based on working of Rs. 11,09,72,200/Rs. 1,06, 25, 38, 120*100 = 10.44 %." 2. The appellant craves to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal." 3. Facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia Ltd 8.24 Assessee viii. Schrader Duncan Ltd 2.47 Assessee ix. Triton Valves Ltd 9.66 Assessee X. Upasana Engineering Ltd 0.86 Assessee xi. Vaid Elastomer Processors Pvt. Ltd. -25.3 Assessee xii. Alpha Toyo Ltd. 2.8 Assessee xiii. Adroit Industries (India) Ltd. 19.15 TPO xiv. Banco Products India Ltd. 24.74 TPO XV. Kar Mobiles Ltd. 6 TPO xvi. Rane Engine Valves Ltd. 5.3 TPO xvii. Raunaq Auto Components Ltd. 6.77 TPO xviii. Brakes India Ltd. 7.75 TPO xix. ANG Industries Ltd. 4.1 TPO xx. Duro Valves India Pvt. Ltd. 6.15 TPO xxi. Wabco India Ltd. 17.49 TPO xxii. Tata Toyo Radiators Ltd. 13.41 TPO xxiii. RSB Transmission (I) Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t as per the provisions of section 92 of the Act. It was argued before the TPO that TP adjustment should be proportionate of international transaction of manufacturing segments. It was accordingly requested to TPO to rectify the mistake. The TPO vide rectification order dated 16th July, 2014 passed u/s 154/143(3) reduced the transfer pricing adjustment from 11,09,72,200/- to Rs. 6,58,73,098/-, the working of which is as under:- Particulars (related to manufacturing segment Amount in INR Reference Total Sales 2,96,84,00,000 Page No. 3 of AO's Rectification Order u/s 154/143(3) dated 16.07.2014 Arm's Length PLI 7.05% Arm's Length Operating Cost 20,92,72,200 Arm's Length Cost 2,75,91,27,000 Operating Cost of 2,87,01,00,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat no adjustment is required to be made while determining the ALP of the international transaction as per the first proviso to section 92C(2) of the IT Act. In appeal, the ld. CIT(A) allowed the appeal of the assessee by observing as under:- "7. Decision:- I have considered the assessment order, order u/s 92CA(3) passed by the TPO and the subsequent rectification order passed by the TPO on 19.08/2014 and 12.03.2015. Without giving into the merits of selection of comparable by the TPO for finally determining the ALP of international transaction u/s 92CA, I would like to dwell upon whether the adjustment made in ALP is within the safe harbor as per second proviso below Sub-section 2 of section 92C of the I.T. Act. While passing the order u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in ALP relatable to manufacturing cost is Rs. 4,10,82,956 on the total operating cost to the manufacturing segment amounting to Rs. 106,25,38,120 ratio (Rs. 4,10,82,956/ 106,25,38,120 X100) which comes to 3.86% which is less than 5% of the base figure of operating cost. The Ld. TPO has rejected the rectification application on the issue of adjustment +-5% as per second proviso to sub-section (2) of section 92C on the ground that these mistakes requires deeper analysis and interpretation therefore is not a mistake rectifiable u/s 154. I have considered the argument of the Ld. AR and findings of the TPO. It is undisputed facts that the total adjustment in manufacturing segment after passing of rectification order u/s 154 dated 12.03.2015 in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Revenue, in our opinion, is without any merit. The various decisions relied on by the ld. counsel also support its case that TP adjustment made under TNMM is not warranted when the value of the international transaction of purchase of raw material and the proportionate arm's length operating cost falls within the +/- 5% arm's length range. We further find that the TPO in the instant case has passed rectification order twice i.e., the first one on 19th August, 2014 and the second one on 12th March, 2015 and finally reduced the TP adjustment from 11,09,72,200/- to Rs. 4,10,82,956/-. We, therefore, find merit in the argument of the ld. counsel that the appeal filed by the Revenue should be dismissed being infructuous since the variatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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