The Commissioner Of Income Tax, (Central ), Jaipur v. M/S Kgk Enterprises, 647-A, Panchratna, Opera House Mumbai

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH ATJAIPUR D.B. Income Tax Appeal No. 47 / 2014 The Commissioner of Income Tax, (Central ), Jaipur ----Appellant Versus M/s Kgk Enterprises, 647-A, Panchratna, Opera House Mumbai-400004 ----Respondent _____________________________________________________ For Appellant(s) : Mr. Anil Mehta withMr. Sameer Sharma For Respondent(s) : Mr. Sanjay Jhanwar with Mr. Prakul Khurana _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE VIJAY KUMAR VYASJudgment 18/09/2017 1. By way of this appeal, the appellant has challenged thejudgment and order of the Tribunal whereby the Tribunal haspartly allowed appeal of the department and cross-objection of theassessee was dismissed as not pressed. 2. This Court while admitting the matter framed the followingquestion of law:- “1. Whether in the facts and circumstances of the casethe ITAT order is perverse in deleting the addition of Rs.14,24,76,886/- made on account of Arm's Length Priceadjustment u/s 92CA(3) of the I.T. Act, 1961 as workedout by the Transfer Pricing Officer, excluding all the eightentities chosen as comparables by the TPO like M/sVishindas Holaram without the Respondent proving thatthese entities dealt in high quality diamonds, and soshould have been excluded from the list of comparablesadopted for determining ALP. 2. Whether in the facts and circumstances of the case the ITAT order is perverse in deleting the addition ofRs.14,24,76,886/- made on account of Arm's LengthPrice adjustment u/s 92CA(3) of the I.T. Act, 1961, evenwhen the TPO determined the ALP with reference to thesales made to AEs only.” 3. Taking into consideration the observation made by the Tribunal which reads as under:- “We have perused the records and considered the rivalcontentions carefully. The dispute is regarding transferpricing adjustment in respect of export sales made bythe assessee to the associate enterprise. The methodapplied for bench marking the international transaction isTNMM on which there is no dispute between the parties.The margin shown by the assessee is 2.16%. The meanmargin of the comparable selected by the TPO is 6.84%.The learned AR for the assessee has not disputed themean margin of 6.84% computed by the TPO. It hasonly been requested that the assessee may be allowedthe benefit of +/-5% as per law and adjustment shouldbe limited to only international transaction and shouldnot be made to the entire sales. The request of theassessee is quite reasonable. CIT(A) in the appellateorder has given detailed working, in which it has beenmade clear that no adjustment is required even if themean margin of 6.84% as taken by the TPO is acceptedas the assessee is entitled to benefit of +/-5% range.The learned CIT(DR) has not pointed out any mistake inthe working given by CIT(A). We, therefore, see noinfirmity in the order of CIT(A) in deleting the additionmade by AO on account of transfer pricing adjustmentthe order of CIT(A) is, therefore, upheld.” 4. We are of the opinion that the Tribunal has not committed any error in giving benefit of all plus or minus for internaltransactions in view of second proviso to Section 92CA(2). 5. Hence, both the issues are answered in favour of theassessee against the department.assessee against the department. 6. The appeal stands dismissed. (VIJAY KUMAR VYAS),J. (K.S. JHAVERI),J.