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2016 (11) TMI 1403 - AT - Income TaxAllocation of expenses on the basis of gross margin in the agency segment - Held that:- We direct the TPO to allocate the expenses on the basis of gross margin in the agency segment and not in the ratio of sales for the purpose of computing the ALP of the international transactions as the TPO/DRP/AO have erred in making adjustment by clubbing commission income with market support services in allocating expenses to the agency segment in the ratio of sales. So, ground is determined in favour of the assessee. Selection of 10 comparables for benchmarking the international transactions having average OP/OC at 22.12% - Held that:- Assessee’s own case of AY 2002-03 that allocation of expenses to the agency segment in the ratio of sales cannot be made, as has been held by the Bench in the preceding paras, sought to exclude three comparables, namely, Aptico Ltd., Choksi Laboratories Ltd. and Wapcos Ltd. and also sought to include three comparables, namely, Educational Consultants India Limited, India Tourism Development Corporation Limited and In House Productions Limited for benchmarking the international transaction and considered its international transactions at arm’s length. Since in view of the findings returned by the Tribunal on ground no.2.2 the basis for allocating the expenses to the agency segment is ordered to be changed, it would be futile to go into the validity of the comparables considered by the TPO for benchmarking international transactions as it would change the entire scenario and fresh TP study analysis is required to be done by the TPO. So, we hereby direct the TPO to make fresh TP study analysis after providing adequate opportunity of being heard to the assessee company to benchmark the international transactions undertaken by the assessee company. So, we decide grounds no.2.2 to 2.7 accordingly.
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