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2022 (10) TMI 482 - AT - Income TaxTP Adjustment - selection of MAM - Assessee selected Transactional Net Margin Method ("TNMM") as the most appropriate transfer pricing method, with operating profit/operating cost ("OP/OC") as the profit level indicator ("PLI") - HELD THAT:- By not taking into consideration the segmental level profitability and calculating margins on entity level basis led to adjustments on the basis of profit allocation instead of segmental costing. More so inspite of availability of audited segmental accounts the DRP failed to take same into consideration. TPO / AO is directed to take into consideration, the audited segmental accounts and thereby make fresh adjustments. Accordingly these grounds are decided in favour of the assessee for statistical purposes. Comparable selection - HELD THAT:- As observed that assessee is dealing exclusively in domain of wastewater treatment facilities while companies included except DRA Consultants Ltd. have varied business interests. Since the assessee has the claim on segmental accounts the functionality test is a vital consequence. As assessee is operating in a very limited sphere of providing ecologically engineer wastewater treatment solutions the companies having diversified areas of interest and with nominal interest in wastewater treatment solutions cannot be said to passing the functionally test. Thus, the AO/ TPO are directed to remove Mitcon consultancy and engineering services, Aakar Abhinav Consultants Pvt. Ltd., Feedback Infra Pvt. Ltd. and Mahindra Consulting Engineers Limited from the comparables and make a fresh adjustments. Accordingly, the ground is decided in favour of the assessee.
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