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2018 (4) TMI 436 - AT - Income TaxTPA - AO/TPO clubbed the domestic transaction of IMFL with international transaction while applying TNMM - economic analysis undertaken by the appellant in respect of international transaction pertaining to purchase of CAP following a segmental approach by segregating manufacturing operations into BIIS and IMFL business verticals - Whether the international transaction of the appellant comply with the arm's length standard even if the TPO's approach of clubbing the BIIS and IMFL segment is to be followed for the year under consideration ? - Held that:- The economic analysis undertaken by the assessee in respect of international transaction pertaining to the purchase of CAP following segmental approach by segregating manufacturing operations into BIIS and IMFL business verticals is in accordance with the relevant Transfer Pricing Regulations. The assessee's international transaction pertaining to purchase of CAP, thus, complies with the Arm's Length Standard for the year under consideration. D.R. merely relied upon the Auditor's Note in the Accounts, which, according to assessee, is not relevant because from the accounting perspective, it is one line of business and accordingly, assessee was not required to disclose segmental reporting in its Note to the Accounts. The assessee filed the segmental accounting on both the segments before the authorities below, which have not been disputed by them. Therefore, there is nothing wrong in the analysis submitted by the assessee for the purpose of benchmarking of ALP. Both the segments cannot be clubbed together to determine the ALP. CIT(A), even on the alternative point considered that even if the TPO's approach of clubbing of both the segments is to be followed for the year under consideration and certain comparables which are not relevant to the issue are excluded, the assessee's would be entitled for full relief on account of T.P. adjustment. The reason given by the CIT(A) have not been disputed by the Ld. D.R. through any evidence or material on record. CIT(A) also considered that manufacturing activity in the IMFL segment largely comprises of contract manufacturing and bottling of liquor for other companies, for which, fixed return are received and in case of bottling, profit is excluded, then also, the ALP declared by the assessee was correct. In the absence of any serious challenge to the findings of the CIT(A) on this issue also, no interference is called for in the matter. No interference is called for in the matter. - Decided against revenue.
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