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2014 (2) TMI 1287 - AT - Income TaxTransfer pricing adjustment - selection of comparable - Held that:- So far as it relates to inclusion of two comparables namely, Santogen Exports Ltd. and Vanasthali Textiles Industries the fact has not been denied that those two comparables were included in the list of comparables during the assessment year 2007-08. It has not been shown that these two comparables were consistent loss making companies. It is the plea of the assessee that comparables should be chosen from the perspective of their functional comparability and as per parameter laid down in Rule 10B(2) of Income Tax Rules, 1962. It was also the submissions of the assessee that these two companies had made profit in the earlier years and have suddenly come into losses in the year under consideration. If it is so, those two concerns cannot be excluded from the list of comparables just for the reason that for the year under consideration these two concerns have incurred losses. Therefore, we se no justifiable reason for exclusion of these comparables. DEPB should be taken as operating income - Held that:- No error in the order of Ld. CIT(A) vide which it is held that DEPB benefits should be included in operating profit margin. We are aware that Department in its appeal has not agitated such direction of Ld. CIT(A) but as it was argued before us and we uphold the inclusion of DEPB benefit in operating profit margin. depreciation be treated as operating expenses while computing ALP by TNMM - Held that:- No infirmity in such directions of Ld. CIT(A) as according to well established principle of law while working out profit margin and cost, comparison should be made with like to like and similar to similar. This principle has also been held applicable by the ITAT in assessee’s own case in the aforementioned two orders, where on the basis of similar proposition DEPB benefits have been held to be computed as part of profits while computing margin of the assessee as well as comparables. Accordingly, we decline to interfere in such finding recorded by Ld. CIT(A) and the ground of revenue is dismissed.
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