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TMI Blog2023 (4) TMI 725X X X X Extracts X X X X X X X X Extracts X X X X ..... le particularly considering the fact that in APA for subsequent years, it has been agreed that ALP, in no case, would exceed 100% of sale consideration receivable from ultimate customer. Therefore, accepting the plea of Ld. AR, we direct Ld. TPO to restrict the TP adjustment, for all the three years, by considering 100% of sale consideration receivable from ultimate customer i.e., Nike. The same has been tabulated by Ld. AR in the above table and works out to be Rs.31.49 Crores for all the three years. TPO is directed to verify the figures and restrict the adjustment to that extent. - IT(TP)A No.13/Chny/2019 , IT(TP)A No.14/Chny/2019 , IT(TP)A No.15/Chny/2019 - - - Dated:- 11-1-2023 - HON BLE SHRI V. DURGA RAO, JUDICIAL MEMBER AND H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e considerable bearing on the Arms Length Pricing study of the international transactions with its AEs. The APA having been signed on 24.5.2016, assessee had no occasion to produce it before lower authorities. We are, therefore, of the opinion that the additional evidence has to be admitted. We, therefore, admit the additional evidence, set aside the orders of the lower authorities and remit all the issues back to the Assessing Officer/TPO for consideration afresh in accordance with law. Needless to say all the pleadings taken by the assessee shall remain open. 2.1 Pursuant to the same, another order has been passed by Ld. TPO on 31.10.2017 wherein Transfer Pricing Adjustments have been retained. The same, upon confirmation by Ld. DRP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e revenue and distribute the remaining 8.85% to other AEs for providing know-how and development and towards recovery of interest cost etc. The assessee was thus characterized as routine manufacturer exposed to normal risks associated with carrying out its business. The TPO rejected all the economic adjustments claimed by the assessee owing to initial years of business operations during start-up phase. In the second round, all these economic adjustments were again denied by Ld. TPO relying on the findings in first round. The Ld. DRP confirmed the same against which the assessee is in further appeal before us. 3. The Ld. AR made limited submission that the assessee entered into an Advance pricing Agreement (APA) u/s 92CC with Hon ble CBDT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claimed in TP study (175,070,937) (152,112,427) (291,770,295) Pre-Commencement expenditure(C) (34,794,178) Adjusted cost (D) 149,594,435 1,158,690,381 1,798,097,260 Profit as per TP report (A-D) 20,060,834 53,339,788 54,939,672 Profit as per TP Order (A-B-C) (155,010,103) (98,772,639) (236,830,623) Operating profit / ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adjustments may be restricted by considering 94% or in worst scenario @100% of sales consideration received from ultimate customer i.e., Nike. 4. The Ld. CIT-DR, on the other hand, referred to the earlier order of Ld. TPO in first round and submitted that the assessee was to be remunerated at cost-plus mark-up and therefore, no economic adjustments could have been granted to the assessee. The Ld. CITDR also submitted that the terms of APA were not applicable in these years and therefore, the orders of lower authorities were to be confirmed. Having heard rival submissions and after perusal of case records, our adjudication would be as under. 5. We find that the basic factual matrix is not under dispute. The assessee works as a contract ..... X X X X Extracts X X X X X X X X Extracts X X X X
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