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2017 (3) TMI 1533 - AT - Income TaxTPA - MAM - Held that:- Both the assessee and the TPO had applied TNMM method to benchmark the international transactions and PLI of assessee for the said segment by applying OP/OC was worked out at 3.66% (or 3.67%). The TPO had calculated the margins of comparables and the arithmetic mean of final list of comparables worked out to 8.54%. Proviso to section 92C(2) of the Act provides a benefit to the assessee that no transfer pricing adjustment would be made in case the arm's length price determined by the TPO was within range of +/- 5% of the actual revenue from the international transaction. The perusal of the order of TPO and the details filed by the assessee reflect that the margins of international transaction relating to manufacturing segment was were within +/- 5% of actual revenue earned from the manufacturing segment and hence, we direct the Assessing Officer to verify the claim of assessee and delete the addition. The grounds of appeal No.2 and 3 raised by the assessee are thus, decided on preliminary issue. Selection of comparables - Held that:- The assessee had provided support services to its associate enterprises i.e. supply based development services, wherein the revenue earned was ₹ 9,34,38,095/-. Further, the assessee had made provision of IT services to the extent of ₹ 59,64,133/- which constitute IT and other business support services. Thus companies dissimilar with that of assessee need to be rejected as comparable. Adjustments made to application engineering services segment - Held that:- The application engineering services was comprised of customization of business of turbocharges to particular vehicle models of different customers, where the best design of turbocharges is already developed and patented and the assessee provides services relating to customization of the best design as per the requirements of customer. Thus companies dissimilar with that of assessee need to be rejected as comparable.
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