Case Law Details
Demag Cranes & Components (India) Pvt. Limited Vs. DCIT (ITAT Pune)- provisions of 10B(1)(e)(iii) of the Income tax Rules, 1962, which provides for the adjustments in the context of TNMM. From the above, it is explicitly clear that the for the arriving at the arm’s length price (ALP) as per TNMM, the net profit margin arising out of the comparable uncontrolled transactions is adjusted to take into account differences, if any between the (i) international transactions and filtered comparables of uncontrolled transactions or enterprises entering into such transactions, which could materially affect the amount of the net profit margin in the open market. It is a fact the differences, if any mentioned in the said sub-clause (iii) are not specified in the Act. However, as evident from the above extract of the provisions, they provide for certain guidelines i.e. any differences, which could materially affect the amount of net profit margin fall in the scope of adjustments. Further, we may also take help of the available material in the form of the I T rules, explanation-memoranda, commentaries, OECD guidelines, various judicial decisions etc. In the light of the above scope of the rule 10B and the effects of the WC on the price1profit margin, we shall now discuss the existing law on hand on the issue of adjustments on accounts of the WC related differences between the tested party and the benchmarked comparable.
IN THE INCOME TAX APPELLATE TRIBUNAL, Pune
ITA No. 120/PN/2011 – Assessment Year: 2006- 07
Demag Cranes & Components (India) Pvt. Limited
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