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2013 (8) TMI 186 - AT - Income TaxTransfer pricing adjustment - Rejection of MacMillan India Ltd as comparable as the financials of Macmillan India Ltd were for the year ended 31st December 2005 whereas the Financials of the tested party are for 31st March 2006 - whether DRP/AO erred in upholding/making an addition under Chapter-X of the Income Tax Act, 1961 - DRP not granted the benefit for adjustment of the Arms Length Price by +/- as per the proviso to section 92C(2) - Held that:- Reiterating the annual closure of the companies it can in no way hamper the comparability of the results as long as the results are for a uniform period. In the case of selection of MacMillan India Ltd as comparable the Annual results of both the Companies are for a period of 12 months as such both the companies have gone through the normal annual business cycle. MacMillan India ltd. operates in 3 major segments. The operating Margin of MacMillan in the publishing segment for the 12 month period ending 31st Dec 2005 is 5.67%. If the TPO's logic is used for comparing results, then the results of no international Company can be used as a comparable, since all the international Companies close their accounts on dates other than 31st March each year & most international Companies use calendar year as their year end. Based on the above, financial data of MacMillan India Ltd. can be used as a comparable. On a perusal of the order of the DRP it has to be set aside as finding support from the judgement of Vodafone Essar Ltd. which has very categorically held that when a quasi Judicial Authority like the DRP deals with lis u/s 144C then it is obligatory on its part to ascribe cogent and germane reasons as reasons are the heart and soul of the matter and facilitate the appreciation of the order when the order is called in question either before a superior forum or an Appellate forum. It is an admitted position on record that in support of its comparables various assertions and facts have been made which has been not dealt with by the DRP. Accordingly, the DRP's order along with the impugned order is set aside and the issue is restored back to the file of the DRP with the direction to pass a speaking order in accordance with law - in favour of assessee for statistical purposes.
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