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2013 (8) TMI 735 - AT - Income TaxTransfer pricing adjustment - Rejection of comparables - loss making companies - Held that:- the comparables could not be rejected only on the ground of loss making. The cases of loss making companies are required to be further examined to find out if the loss had occurred during the normal course of business or because of some extraordinary factors which have affected the comparability of the transaction. Only in the later case the loss cases have to be excluded. No such exercise has been done - both assessee and TPO have applied TNMM method at entity level which is not correct. The adjustment is required to be computed only with respect to international transaction and not in respect of the entire business transactions - Merely because the assessee had made mistakes in computing the TP adjustment the authorities cannot follow the same blindly as they are duty bound to compute the adjustment correctly as per law. Because of the mistakes committed by both the sides TP adjustment has been made at Rs. 65.27 crore when the entire purchases from the AE was only Rs. 56.25 crore. It will not be appropriate to compare the margin of manufacturing companies to those of trading companies. - business profile of the assessee itself was not very clear. - it is appropriate that a fresh transfer pricing study be undertaken for selecting proper comparables after careful study of functional profile of the assessee so as to arrive at proper TP adjustment - Decided in favour of assessee.
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