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Income Tax Appellate Tribunal, MUMBAI BENCH “K”, MUMBAI
Before: SHRI G.S. PANNU & SHRI RAVISH SOOD
The captioned appeal by the assessee is directed against the order of DCIT-6(1), Mumbai dated 30.01.2014, pertaining to the Assessment Year 2009-10, which in turn has arisen from the directions of the Dispute Resolution Panel – 1, Mumbai dated 18.12.2013 under section 144C(5) of the Income Tax Act, 1961 (in short ‘the Act’).
At the time of hearing, the only grievance projected by the learned representative for the appellant is that transfer pricing adjustment has been made to the total income u/s 92CA(4) of the Act without considering the provisions of second proviso below Sec. 92C(2)
2 Agritrade India Services Pvt. Ltd. of the Act. Notably, the second proviso to Sec. 92C(2) of the Act prescribes that if the variation between the arm’s length price determined by the income-tax authorities and the price at which the international transaction has actually been undertaken does not exceed such percentage as prescribed therein, then the price at which the international transaction has been actually undertaken shall be deemed to be the arm’s length price.
In this context, it was pointed out that an assessment u/s 143(3) r.w.s. 144C(13) of the Act was completed on 21.01.2014 at an income of Rs.94,85,320/- which, inter-alia, included an adjustment on account of transfer pricing determined by the Transfer Pricing Officer (TPO) u/s 92CA(3) of the Act of Rs.4,68,23,563/-. The learned representative pointed out that subsequently the TPO vide order dated 27.01.2014 recomputed the adjustment at Rs.41,68,656/- and thereafter the Assessing Officer passed an order u/s 154 of the Act dated 30.01.2014 whereby the assessment order dated 21.01.2014 was amended and the total income has been assessed at a loss of Rs.3,31,69,585/- by making the transfer pricing adjustment in conformity with the amended order of the TPO.
The plea set-up by the assessee is that the variation between the arm’s length price re-determined by the TPO and the stated value of international transaction of Rs.38,23,28,097/- was less than 5% and, therefore, as a consequence, the stated value of the transaction is to be accepted as the arm’s length price. The learned representative pointed out that the appellant would be satisfied if the matter is set-aside to the 3 Agritrade India Services Pvt. Ltd.
file of Assessing Officer with directions that appropriate rectification be carried out after applying the provisions of the second proviso to Sec. 92C(2) of the Act.
The Ld. CIT-DR, on the other hand, referred to para 8.5 of the order of DRP to point out that assessee’s claim for adjustment of + 5% as a standard deduction was disallowed in view of the amendment made by Finance (No. 2) Act, 2009 to Sec. 92C of the Act.
In our considered opinion, the plea raised by the Ld. CIT-DR is not maintainable inasmuch as what the appellant is seeking is the implementation of the mechanics of second proviso to Sec. 92C(2) of the Act as it existed for the period under consideration and obviously such a plea of the assessee is not to be governed by the anterior provisions of Sec.92C of the Act referred by the DRP. As a consequence, we allow the plea of assessee and direct the Assessing Officer to recompute the adjustment on account of transfer pricing by implementing the provisions of second proviso to Sec. 92C(2) of the Act. Needless to say, Assessing Officer shall allow the assessee a reasonable opportunity of being heard and thereafter pass an appropriate order on this limited issue as per law.
In the result, appeal of the assessee is allowed, as above.