S.92C: Avoidance of tax- Transfer pricing –Computation of Arm’s Length Price – Sale Price realized from AE
much higher than ALP fixed by TPO – No recommendation by TPO for adjustment – AOis not required to
make any adjustment. (S.10B(7), 80IA (10)
The Assessee is engaged in sale and export of pasteurized crab meat. The Assessee entered in to international transactions with its associated enterprise and showed sale price at Rs 24 Crores. TPO on reference made by the Assessing Officer, fixed arm’s length price of goods at Rs 18 Crores. Assessing Officer opined that receipts of the assessee from sales to AE were in excess of arm’s length price and such excess was nothing but income from other sources. The Assessing Officer relying on provisions of section 10B(7) read with section 80IA (8) and 80(IA) (10) added excessive receipts to income of assessee. On appeal Commissioner (Appeals) deleted the addition. On appeal by revenue, the Tribunal held that, where sale price realised from AE was much higher than ALP fixed by TPO and there was no recommendation by TPO for making any adjustment, Assessing Officer was not at all required to make any adjustment in ALP. Accordingly the appeal of revenue was dismissed. (A.Y. 2007-08)
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