Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2019 (12) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (12) TMI 1641 - AT - Income TaxTP Adjustment - Comparable selection - HELD THAT:- Rane TRW Steering Systems Ltd. - As the export sale of the assessee is 98.90% of the total sales whereas the export sale of Rane TRW Steering Systems Ltd., which primarily caters to the domestic market is 11.47% of the total sales. Apart from the above, Rane TRW Steering Systems Ltd., is engaged in the research and development activities in their product/process development and thereby has incurred huge Research & Development expenses during the year which is verifiable from the annual audit report placed - It also holds intangible assets which are verifiable from the notes on fixed assets - In view of all these i.e., diversified business, low export sale, non-availability of segmental data, incurring of expenditure on R&D activities and presence of intangibles, we are of the considered opinion that Rane TRW Steering Systems Ltd., cannot be considered as a comparable company. We, therefore, direct the A.O./TPO to exclude Rane TRW Steering Systems Ltd., from the list of comparables. ZF Steering Gear (India) Ltd. - As relying on various decisions to the proposition that the comparables have to be excluded on account of carrying out research and development activities and considering the fact that the comparable company has very low export sales as compared to that of the assessee, we hold that ZF Steering Gear (India) Ltd., cannot be considered as a comparable. Negative working capital adjustment for the differences between the working capital of comparable companies vis-à-vis the assessee - As in the instant case, majority of sales i.e., 94% of the total sales made by the assessee is to its related parties, therefore, the assessee, in our opinion, is running its business with no working capital risk. Therefore we are of the considered opinion that the TPO/DRP were not justified in making negative working capital adjustment. Therefore, the additional ground raised by the assessee is allowed.
|