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2018 (11) TMI 1545 - AT - Income TaxTPA - MAM selection - selection of TNMM as the most appropriate method - Held that:- If adjustments as permissible under TNMM are considered, he ultimately conceded that the issue of selection of most appropriate method may be left open for adjudication in some other year recording the assessee's objections to tinkering with the most appropriate method without any justification. Having thus considered the facts and circumstances alongwith the submissions of the parties, we leave the issue of selection of the most appropriate method open to be considered in another year. We note that the TPO while upsetting the most appropriate method selected by the assessee has admittedly not considered the facts fully and infact appears to have confused himself with the method selected by the assessee. Since in view of the relief maintainable to the assessee even in the method selected by the TPO the issue of most appropriate method in terms of the concession of the assessee becomes academic the same accordingly is left open. Exclusion of comparables - inclusion of Blue Star as a comparable - Held that:- It is seen that the said comparable undertakes research and developmental activities which position is not disputed by the tax authorities. It is also seen that Blue Star has various other segments wherein assembly of air conditioners is also one of the segments. On a consideration of facts we deem it appropriate to remand the issue and direct the TPO to work out the profit margin of the relevant segment of this comparable the inclusion of the said comparable is upheld on the said condition. However in case the TPO is unable to obtain the relevant details then the comparable is directed to be excluded. Capacity utilisation benefit - Held that:- We have seen that the assessee has shown that after reaching a threshold of certain manufacturing activity level the assessee has finally broken even and has also returned profits. The chart and figures made available in the course of the hearing based on documents in public domain admittedly demonstrate the fact. It is well accepted that in the peculiar case like that of the assessee, the manufacturing costs would necessarily have certain fixed overheads and these costs would be met only when manufacturing activity breaches a certain level. Thus considering the peculiar facts and considering the judicial precedent cited we deem it appropriate to restore the issue back to the TPO with the direction to give necessary relief in accordance with law. Addition u/s 41 - Held that:- We find that though the legal position is well settled by the decision of the Delhi High Court in the case of CIT versus EKL [2012 (4) TMI 346 - DELHI HIGH COURT ] however, considering the judicial precedent in assessee’s own case wherein on similar set of facts and circumstances the TPO himself has made no addition in 2014–15 assessment year we accordingly deem it appropriate to set aside the issue to the TPO to verify whether there was any services availed by the assessee during the year or not. The factum of payment made in the year under consideration stands offered in 2015-16 Assessment Year as argued i.e. has it been included in the taxable income of the assessee in terms of section 41 (1) of the Act has no relevance in this case. Subject to verification the TPO is directed to examine the issue afresh and decide the issue in accordance with the law.
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