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TMI Blog2021 (2) TMI 715X X X X Extracts X X X X X X X X Extracts X X X X ..... are at arm's length. It is further to be noted that in Assessment Year 2004-05 similar adjustment made by the TPO and reduced by Commissioner (Appeals) by adopting identical method was restored back to the Assessing Officer by the Tribunal [ 2013 (1) TMI 369 - ITAT MUMBAI] . Thus, on overall consideration of facts and circumstances of the case, we are of the view that the revenue has failed to bring on record any material or substantive argument before us to controvert the findings of learned first appellate authority. That being the case, we do not find it appropriate to interfere with the decision of learned Commissioner (Appeals). Ground raised is dismissed. - ITA No. 561/Mum/2011 - - - Dated:- 9-2-2021 - Saktijit Dey , Member ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... comparables worked out at 9.95% on multiple year data and 9.73% on the current year data, the transaction was claimed to be at arm's length. The Transfer Pricing Officer (TPO), however, did not accept the benchmarking of the assessee. He observed, due to idle capacity of salaried employees, the profit margin of the assessee has been reduced. He observed, since the assessee has not undertaken any domestic transaction or transaction with third parties, the idle capacity is only on account of AEs not giving enough business to the assessee. Therefore, he disallowed idle capacity adjustment claimed by the assessee. Having done so, the TPO determined the assessee's margin on cost at (-) 5.21% as against arm's length margin determined ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dences furnished by the assessee on merits, the Transfer Pricing Officer simply stated that they should not be admitted. After verifying the additional evidences, learned Commissioner (Appeals) found that the profit margin of the AEs from the amount retained from gross revenue received from end customers varied between loss figure to 20.93%.After verifying all relevant facts, the learned Commissioner (Appeals) observed that in US UK where the AEs are located, the arm's length profit margin for marketing services of the nature provided by them generally ranges from 5% to 7% depending upon the facts and circumstances of each case. Considering the same, he concluded that profit margin of 6% of the AEs could be considered as appropriate a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me projects the AEs did not retain even a single rupee and entire revenue was passed on to the assessee. He submitted, considering the function performed by the AEs and the cost incurred, the revenue retained by the AEs and the profit margin earned by them is at arm's length. Further, he submitted, under identical facts and circumstances, similar adjustment made by the TPO was set aside by the Tribunal to the Assessing Officer/TPO and the TPO has ultimately accepted the transaction to be at arm's length in Assessment Year 2004-05. Thus, he submitted, there is no reason to interfere with the decision of learned Commissioner (Appeals). 6. We have considered rival submissions and perused materials on record. As could be seen from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee has shifted a part of its profit to the AEs. Moreover, learned Commissioner (Appeals) has held that the ALP margin of the AEs towards their marketing efforts can be reasonably fixed at 6%. Therefore, wherever the AE's profit margin has exceeded 6%, learned Commissioner (Appeals) has considered such excess as adjustment to the ALP. That's how he has worked out adjustment to be made at ₹ 1,56,78,265/-. As it emerges from record, the facts on the basis of which learned Commissioner (Appeals) has concluded thus, clearly emerge from the additional evidences furnished by the assessee. It is a fact that the additional evidences were forwarded to the TPO for his examination and necessary comments; however, he has chosen n ..... X X X X Extracts X X X X X X X X Extracts X X X X
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