2023 (1) TMI 374 - AT - Income Tax
Rectification of mistake u/s 154 - TP Adjustment - Comparable selection - whether the TTK healthcare Ltd is a functionally comparable to the the Assessee or not for deciding the arm’s length price of the international transaction of the assessee? - HELD THAT:- TPO after considering the explanation of the assessee issued a notice u/s 133 (6) to TTK healthcare limited which was replied to stating that medical devices segment of TTK healthcare limited is engaged in manufacturing activity having its own manufacturing units.
Company has also submitted the margin in trading and manufacturing segments. The margin in trading segment is 1.36% which is very less. The learned TPO therefore held that TTK healthcare limited is not comparable to the assessee/tested party and therefore it is finally excluded from the list of final comparables. After that the learned TPO computed the margin of comparables at 2.69% and also computed the margin of the assessee at 3.98%. He held that since the profit level indicator of the assessee is higher than the profit level indicator of the comparables the international transactions under discussion is at arm’s length.
TTK healthcare limited is not a good comparable and therefore is required to be excluded. Further on exclusion of this comparable the margins of the assessee is higher than the margin shown by the comparables. Therefore, no transfer pricing adjustment can be made.
This is the only dispute even in recalled order. We have heard the rival contentions and perused the orders of the learned transfer pricing officer passed under section 92CA (3) read with section 254 of the income tax act. The learned departmental representative could not show any reason that the order passed by the learned transfer-pricing officer pursuant to the direction of the coordinate bench, is not correct.
Ground number 1 and 2 of the appeal of the assessee is allowed.