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TMI Blog2021 (2) TMI 187X X X X Extracts X X X X X X X X Extracts X X X X ..... nts made to the Associated enterprises? - HELD THAT:- Section 92(1) of the Act provides that any income arising from an international transaction shall be computed having regard to Arms Length Price. Section 92B(1) deals with meaning of international transaction, which means a transaction between two or more associated enterprises either or both of whom are non residents in the nature of purchase, sale or lease of tangible or intangible property or provisions of services or rendering or borrowing money. Section 92C of the Act deals with computation of Arms Length Price. CIT (Appeals) has recorded a finding that since the assessee had earned profit in a technical service segment in contracts other than contracts with SKF and therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stantial question of law: Whether the Tribunal is correct in law and facts in upholding the Commissioner of Income Tax (Appeals)'s order ignoring the basic mistake therein that having accepted Transaction Net Margin Method and the Profit Level Indicator as OP/TC when the application of the Profit Level Indicator on the total cost is proper and not on the payments made to the Associated enterprises? . 2. Facts leading to filing of this appeal briefly stated are that the respondent provides its technical consultancy services to third parties and operate as entrepreneur. The business of providing technical consultancy services is an independent business segment. The parent company of the assessee is EDS Sweden and another Swedish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which includes the cost of services of all other segments of EDS India as well and does not pertain to technical consultancy segment alone. 4. The assessee claimed the benefit of deduction under Section 10A of the Act in respect of profits derived from export of software STP Units and claimed deduction under Section 80HHE in respect of profits derived from export of computer software available to any entity. However, the Transfer Pricing Officer by order dated 06.05.2006 considered the loss of 14.76% in the entire technical consultancy services agreement and was of the view that since, independent parties had an average margin of 17.02% therefore, there ought to be an adjustment. Thus, an adjustment of ₹ 7,91,44,777/- was made. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed transaction net method or bench marking cost as the profit level indicator and the Commissioner of Income Tax (Appeals) has confirmed the aforesaid finding of the Transfer Pricing Officer. It is submitted that having concurred with the finding recorded by the Transfer Pricing Officer on the method adopted by him, the Commissioner of Income Tax (Appeals) ought to have held that the adjustment has to be restricted to SKF contracts, which has made losses and by adopting transaction net margin method, the profit margin of 17.02% ought to have been applied on the total cost of ₹ 17,11,64,696/- and therefore, mistake in computation of the adjustment in the order of the Commissioner of Income Tax needs to be corrected. It is also submitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question of law arises for consideration. In support of aforesaid submissions, reliance has been placed on decisions of the Supreme Court in 'SUDARSHAN SILKS SAREES VS. COMMISSIONER OF INCOME-TAX', (2008) 169 TAXMAN 321 (SC) and a decision of this court in PCIT AND ANOTHER VS. SAMSUNG R D INSTITUTE BANGALORE PVT. LTD. I.T.A.NO.622/2017 DATED 30.11.2020. 8. We have considered the submissions made by learned counsel for the parties and have perused the record. Section 92(1) of the Act provides that any income arising from an international transaction shall be computed having regard to Arms Length Price. Section 92B(1) deals with meaning of international transaction, which means a transaction between two or more assoc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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