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2016 (1) TMI 1281 - AT - Income TaxTransfer pricing adjustment - appropriateness of the comparables selected by the assessee - Held that:- The assessee company involved in manufacture of APIs/Bulk Drugs, the comparable companies involved in similar activity only should have been taken as comparable. Transactions between the assessee and Matrix Laboratories Ltd. as deemed international transactions - Held that:- Taking due note of the decisions of the coordinate benches of this Tribunal in assessee’s own case for the assessment years 2006-07 and 2009-10, it is held for the assessment year under consideration as well that the transactions between the assessee and the Matrix Laboratories are not international transactions and the same are not amenable to transfer pricing adjustment under S.92B of the Act. Consequently, grounds of the assessee are treated as allowed. Whether the rent realised on lease of the building and equipment can be considered as operating income of the assessee? - Held that:- Though the assessee submitted that the building and the equipment were given for carrying out the business operations and sales and boost the assessee’s business income, assessee has not filed copies of agreement between the assessee and the Matrix Laboratories in India or the services provided to the lessee of the building and equipment. Therefore, it is not verifiable as to the nature of the income derived by the assessee by leasing out the building or equipment. Unless and until the property is let out for the purpose of assessee’s business, the same cannot be treated as business income or operating income of the assessee. Even before us, the assessee has not been able to produce any evidence in support of its contention that the income from letting out of the building and equipment is operating income. In view of the same, we do not see any reason to interfere with the orders of the Assessing Officer/DRP on this issue. Transactions with non-AEs - Held that:- TPO has taken the total turnover including transactions with non-AE companies, for the purpose of determination of ALP. It has been held in a catena of cases that it is only the transactions or the turnover involved in the transactions with AEs alone, which have to be considered for computation of ALP. The Assessing Officer/TPO are accordingly directed to take into account the turnover of the transactions with AE only for the purpose of computing the ALP. Accordingly, grounds treated as allowed for statistical purposes.
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