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2020 (10) TMI 1147 - AT - Income TaxTP Adjustment - MAM selection - Comparable selection - Whether turnover as not relevant comparability factor to select the comparable companies? - HELD THAT:- Yuken India Ltd. and WPIL Limited having high economic scale and R & D function are not functionally comparable to the assessee, whose turnover is low and is not performing any R & D functions. Accordingly, we direct the exclusion of Yuken India Ltd. and WPIL Limited from the final list of comparables. Roto Pumps - major sale turnover of the said concern is in the form of export sales i.e. to the extent of 60.25% as against export turnover of the assessee at 5.18%. Further, Roto Pumps is also having different product segment of spare parts, wherein sale of spares is to the extent of 50% in contrast to the sale of finished products by the assessee. The assessee has filed the details of the break up of the sale of finished goods in Note-6.h of audited financial statement, and in these circumstances, we hold that the concern Roto Pumps is to be excluded from the final list of comparable, both on geographical differences and also on being functionally not comparable to the assessee. Computation of PLI of the comparable - assessee states that the TPO did not provide the calculation of the PLIs of the comparable companies - HELD THAT:- As before DRP, the same along with annual report were filed, which was rejected on the ground that the assessee had not given required data and valid reason for difference in margin. We are of the view that where the annual reports are available in public domain then the PLIs are to be computed based on such annual reports. The AO/TPO is thus directed to verify the correctness of the PLIs from the annual reports and revise the average of the PLIs of the finally selected comparables. Consequently, the ground of appeal no.5 and additional ground of appeal no.14 are allowed. Exclude the foreign exchange fluctuation cost while computing the PLI of the assessee - Case followed MERCEDES-BENZ INDIA PVT. LTD. [2019 (8) TMI 443 - ITAT PUNE] Whether TP adjustment is not made in proportion to value of international transaction? - Tribunal in Assessment Year 2013-14 had also given similar directions and the same may be adopted. We find merit in the plea of the assessee and following the ratio laid down by the Tribunal in assessee’s own case for Assessment Year 2013-14 [2018 (4) TMI 1835 - ITAT DELHI] we direct the Assessing Officer accordingly to recompute if any. Not giving direction regarding carry forward/brought forward losses - HELD THAT:- AO is directed to carry out the necessary verification in this regard and decide the same in accordance with law after affording reasonable opportunity of hearing to the assessee.
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