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2020 (6) TMI 311 - AT - Income TaxTP Adjustment - comparable selection - functional similarity - HELD THAT:- Assessee company is engaged in supply of spare parts and other equipment used by engine based power plants and oil and gas pumping system and also provide technical services in relation thereto. The assessee company also renders market support services and project management services to its overseas Associated Enterprises (AEs) , thus companies functionally dissimilar with that of assessee need to be deselected from final list. Mahindra Auto Mobile distributor - On verification of the Annual Report of the Company M/s Mahindra Auto Mobile distributor, which was made available during the course of hearing, we find that in profit and loss account of the payment of the excise duty is reported. We find that no further detail in respect of the excise duty paid by the company is available in the Annual Report. The excise duty is primarily payable on the manufacturing activity and in absence of any detail, the company cannot be treated as pure trader of products. In such circumstances, the company become functionally different from the trading segment of assessee. The functional difference itself is sufficient to exclude the company from the set of the comparables, and we are not examining other grounds like RPT filter etc for rejection of the company. Accordingly, we direct the learned TPO/AO to exclude the company from the set of the comparables and re-compute the average PLI of the comparables and if the PLI of the assessee is found to be more than the average PLI of the comparables, no adjustment would be required in the trading segment of the assessee. Exclusion of comparables selected in technical service segment as being functionally different. Transfer pricing addition made under the MAT provisions - HELD THAT:- Transfer pricing addition is not included in the above list and, therefore, the Assessing Officer is not justified in considering the transfer pricing addition for the purpose of computation of the book profit under the provisions of section 115JB of the Act. Accordingly, we allow the ground of the assessee in this regard.
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