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2018 (12) TMI 1868 - ITAT PUNETP Adjustment - assessee company was engaged in manufacturing and trading activity - TNMM method - HELD THAT:- The first aspect of the issue is that admittedly, the assessee is carrying on two separate divisions i.e. two separate activities; one is the manufacturing and second is trading. AO had considered the operations of assessee in entirety and held it to be one activity. In the preceding year, the assessee was held to be in carrying on two activities. There is no dispute to the same. Accordingly, we hold that the assessee is engaged in two separate activities; one is manufacturing and the second is trading. Coming to the second step, wherein it is the duty of Assessing Officer / TPO to benchmark two activities separately. Accordingly, we direct the Assessing Officer / TPO to apply TNMM method and go through the comparables selected by assessee and determine the arm's length price of international transactions entered into by assessee with its associated enterprises under the umbrella of manufacturing activity and also as part of trading activities. The two activities have to be benchmarked separately and independently, for which reasonable opportunity of hearing shall be provided to the assessee. Accordingly, we remit the issue back to the file of Assessing Officer / TPO in this regard. The grounds of appeal raised by Revenue are thus, allowed for statistical purposes.
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