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2022 (12) TMI 201 - AT - Income TaxTP adjustment - Comparability - Functional dissimilarity - functions of a manufacturer and assembler - HELD THAT:- Assessee is mainly engaged in the assembling of Hydraulic accessories. From the table furnished above, we noticed that Asco (India) Ltd. is fullfledged manufacturer and it manufactures Solenoid Valves involving high technology and it constitute 74% of the turnover. This is evident from the fact that the average selling price of Solenoid Valves manufactured by Asco (India) Ltd. is Rs. 4,492/- per piece, while selling price of product assembled by the assessee ranges from Rs. 288/- to Rs. 1802/- per piece. Asco (India) Ltd. has got a technical collaboration for manufacture of valves and accordingly owned intellectual property right therein. Hence there is wide difference in the functions of a manufacturer and assembler. It is further stated that the assessee’s hydraulic products used fluids for movement of parts of a system. M/s Asco (India) Ltd. manufacturers Nuematic products which use Air as a medium for movement of parts of a system. Thus we are of the view that Asco (India) Ltd. could not be functionally comparable with the assessee and hence it cannot be considered as comparable company in the hands of the assessee. Accordingly, we direct the Assessing Officer/TPO to exclude Asco (India) Ltd. from the list of comparable companies and rework arm’s length price accordingly. Appeal filed by the assessee is treated as allowed.
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