INCOME TAX ACT, 1961

Section 92C

Transfer Pricing - Determination of ALP - Adjustment in international transactions being less than 5% of total international transactions -

Assessee-company was engaged in business of manufacturing and trading of components of car A/C systems. AO referred the matter to TPO under section 92CA for computation of arm's length price of the international transaction entered into by the assessee. TPO only proposed adjustment in respect of international transactions entered into with manufacturing segments. Held: It was found that TP adjustment in respect of international transactions entered into with manufacturing segments was 3.86% of the operating cost of the manufacturing segment. Therefore, the adjustment in international transactions being less than 5% of the total international transactions was deemed to be at ALP as per second proviso to section 92(2). Further, it is settled that TP adjustment made under TNMM is not warranted when value of the international transaction of purchase of raw material and proportionate arm's length operating cost falls within + 5% arm's length range. Accordingly, the addition made on account of TP adjustment was deleted.

REFERRED :

FAVOUR : In assessee's favour

A.Y. :

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