Assessee contented that his main business was retail of watches. Selling Diamond was “one-off” transaction and not part of regular operations. Submitted segmental data showing diamond sale profit separately.

The Revenue contended that the transactions involving watches and diamonds were regular in nature and did not accept the assessee’s claim that the export was a “one-off” transaction.

ITAT states that this, “one-off” such transaction, has no relevance on the primary operation of the assessee regularly carried on over the years. Since it is “one-off” transaction, it cannot be termed as a separate segment for transfer pricing purposes nor clubbed with regular business.

The assessee contented that sale of diamond should not be combined with watch business for entity level TP adjustment. Also submitted segment profit of 2.38% from diamond export.

The Revenue rejected the segmental profit submitted by assessee and treated Diamond sale as regular business transactions.

ITAT states that TPO cannot reject the assessee’s claims as diamond sale is “one-off” transaction and proceed to determine entity level adjustment without considering the fact that trading of diamond is not its regular business.

With respect to the sale of watches transaction, the assessee contended that the interest on receivables amounted to INR 486, arising only due to delays in payment against two invoices. Of these, only one invoice exceeded the stipulated credit period of 60 days, with a delay of 7 days.

The Revenue generally allowed a credit period of 60 days; however, it did not verify or examine the actual delay in payment on an invoice-wise basis.

ITAT held that AO/TPO to verify actual delay and allow correct interest.