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2017 (9) TMI 1836 - AT - Income TaxTP Adjustment - rejection of aggregation approach by the TPO - HELD THAT:- Once the business strategy adopted by the assessee is an accepted manner of conducting its business, then the same should be accepted and should not be segregated. There is no merit in the approach of the TPO in segregating the import of straws from the division of packaging material and benchmarking it separately by considering loss in the said division. The reason for loss on sale of straws is the business strategy adopted by the assessee to sell its packaging material and the loss, if any, suffered by the assessee gets absorbed in the sale of manufactured packaging material on overall basis. Accordingly, we hold that sale of machines, packaging material and the straws are closely interlinked and the same cannot be evaluated separately because of business strategy adopted by the assessee. Here, we may refer to the definition of transaction as prescribed in Rule 10A(d) of the Rules, which clearly states that the transaction includes number of closely linked transactions. Hence, the provisions of the Act also recognizes person to undertake its international transactions by including any number of closely interlinked transactions. We uphold the business strategy adopted by the assessee which would follow that sale of machinery, packaging material and straws, etc. were closely interlinked and the same could not be evaluated separately. The aggregation approach adopted by the assessee in benchmarking its international transactions of closely interlinked transactions is thus, accepted. TPO while benchmarking two segments of sale of packaging machinery and equipment and sale of straws as functionally separate, had applied same margin of 5.87% of comparable companies for both the functionally different segments. Where the two segments are treated as functionally different from each other, then the same could not be compared with the margins of same comparable companies for both the segments. Accordingly, we accept the aggregation approach applied by the DRP and dismiss the grounds of appeal raised by the Revenue. Provision of warranty - assessee claims that as part of its sale and supply of processing equipment and filling machines, it was offering warranty for 12 months from the date of commissioning or 18 months from the date of delivery, whichever was earlier - HELD THAT:- The issue arising in the present appeal is squarely covered by the similar issue as in earlier year [2016 (12) TMI 1355 - ITAT PUNE] and even the DRP and the Assessing Officer had disallowed the claim of assessee, since similar claim was not allowed in earlier years. Following the same parity of reasoning, we direct the Assessing Officer to allow the claim of provision for warranty
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