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TMI Blog2023 (4) TMI 1223X X X X Extracts X X X X X X X X Extracts X X X X ..... ansaction level, and if the adjustment was arrived at falls within 5% point of the international transaction, no adjustment has to be made to the international transaction of the assessee. - ITA No. 575/Ahd/2015 - - - Dated:- 17-4-2023 - Smt. Annapurna Gupta, Accountant Member And Shri Siddhartha Nautiyal, Judicial Member For the Assessee : Shri Bandish Soparkar, AR and Shri Parin Shah, AR. For the Revenue : Shri Sudhendu Das, CIT-DR. ORDER PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER Present appeal has been filed by the assessee against order passed by the ld. Dispute Resolution Panel, Ahmedabad [hereinafter referred to as Ld.DRP under section 143(3) read with section 144C(1) of the Income Tax Act, 1961 ( the Act for short) dated 10.12.2014 pertaining to the Asst.Year 2010-11. 2. The grounds raised in the appeal are as under: 1. Your appellant being aggrieved by the order passed by Learned Dispute Resolution Panel, Ahmedabad, directions dated 10.12.2014, presents this appeal on following grounds. 2. The Learned Dispute Resolution Panel, Ahmedabad has erred in not allowing Upward Revision of Rs.12,39,23,444/- towards purchase price of im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Value of international transaction Rs.38,26,44,483.2 5% of the ALP determined by assessee Rs.1,91,32,224.16 5. He, thereafter, stated that his challenge to the impugned adjustment made to the international transaction was on the following grounds: i) Quantum of operating sales of the assessee taken in the above table at Rs.156,07,47,790/- was incorrect, and the correct figure of operating revenue was Rs.160,79,18,331/-; ii) Comparables finally taken for determining the Arms Length mean Profit margin / Profit Level Indicator (PLI),needed adjustment on account of certain comparables having been included therein, which need to be excluded, while certain comparables rejected by the TPO needed inclusion therein; iii) That adjustment made by the Department by applying PLI of the comparables at the entity level was incorrect and it should have been applied at the transaction alone of the assessee with the AE of imports. 6. The ld.counsel for the assessee contended that if his arguments of the operating sales needing upward correction and the application of the PLI at transaction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Whether within Range? YES Therefore, we shall proceed to deal first with these arguments made by the assessee. 7. With regard to the figure of operating revenue to be taken at Rs.160.79 crores as against Rs.156.07 crores taken by the Department, the ld.counsel for the assessee pointed out that while calculating the Revenue at Rs.156.07 crores, the Department had failed to take into consideration the amounts of insurance claim receipt and foreign exchange fluctuation gain of Rs.31,61,578/- and Rs.4,40,008,963/-respectively. He drew our attention to the calculation of figure of Rs.156.07 crores of operating revenue contained at para 8.1 of TPO s order as under: 8. The calculation of operating revenue of Rs.160.79 crores submitted by the assessee to the DRP reproduced at page no.20 at para 2.11 of the DRP order as under: 9. He thereafter drew our attention to the submissions made before the DRP as to insurance claim being in relation to the damage of raw-material and foreign exchange being on account of purchase of raw-material and sale of finished goods, wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same. 11. We have considered contention of the ld.counsel for the assessee before us regarding adjustment to the value of operating revenue taken for the purpose of arriving at the ALP of the international transactions entered into by the assessee with its AE by applying PLI of the comparables thereof. We find merit in the contentions of the ld.counsel for the assessee. The ld.counsel for the assessee has sought adjustment by way of upward revision of figures of operating revenue by including therein the amount of insurance claim received by the assessee and foreign fluctuation gains. He also pointed out that both relates to raw-material consumed by the assessee in the operation of its business of manufacturing heavy machines. The Revenue has been unable to controvert this factual contention of the assessee. 12. In view of the same, we agree with the ld.counsel for the assessee that both the amounts of insurance claim and foreign exchange fluctuation need to be added to the operating revenue of the assessee for the purpose of arriving at the ALP of the international transaction. Thus, this contention of the assessee is accordingly allowed. 13. The next contention of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en made. He contended that this adjustment ought to have been made at the transaction level. The case laws in support of its contentions that the adjustment ought to have been made at the transaction level are - i) CIT v. Tara Jewels Exports (P.) Ltd., [2016] 381 ITR 404/[2017] 80 taxmann.com 117 (Bom) ii) CIT v. Firestone International (P.) Ltd., [2015] 60 taxmann.com 235/234 Taxman 141/378 ITR 558 (Bom) iii) Thyssen Krupp Industries India P. Ltd. Vs. ACIT, (2012) 27 taxmann.com 334 (2013) 55 SOT 497 (Mum-Trib) as approved by Bombay High Court in revenue s appeal CIT Vs. Thyssen Krupp Industries India P.Ltd., (2016) 70 taxmann.com 329/381 ITR 413 (Bom) iv) Hindustan Unilever Ltd. Vs. ACIT, (2018) 28 taxmann.com 142/ 2013) 57 SOT 1 (URO) (Mum.) as approved by Bombay High Court in revenue s appeal CIT Vs. Hindustan Unilever Ltd., (2016) 172 taxmann.com 325/394 ITR 73 (Bom) The ld.DR was unable to controvert the legal proposition as above. 15. Considering the same, we in agreement with the ld.counsel for the assessee that adjustment of the PLI of comparables ought to have been made at the transaction level and not entity level. The ld.AO is directed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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