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2018 (4) TMI 1963 - HC - Income TaxTP Adjustment - method for ALP determination - selection MAM - CUP v/s TNMM - HELD THAT:- In the present case, the CUP method was rejected as an appropriate method having regard to the fact that it unduly restricted the choices of the Revenue. TNMM was considered to be a more appropriate method where greater choice was available. The assessee’s contention in this respect that the supplies made to the Metro Rail alone ought to be considered is equally unpersuasive. The most appropriate method or the transactional similarity does not dictate that two entities alike in all particulars, can only be considered for comparative purposes. As has been repeatedly emphasized in judicial decisions and recognized by rule making authorities, it is the functional similarity which is to be taken into account. Having regard to these, the question Nos.1 and 2 urged do not arise. Admit. The following questions of law arise for consideration: “1. Whether on the facts and in the circumstances of the case, the Tribunal erred in law in upholding the action of the TPO in cherry-picking comparables and considering Titagarh and Texmaco as comparable companies for undertaking benchmarking analysis of international transaction of main line (MLN) segment applying TNMM, not appreciating that the said companies did not satisfy the test of comparability as provided in Rule 10B(2) of the Rules? 2. Whether on the facts and in the circumstances of the case, the Tribunal erred in law in upholding the action of the TPO in deleting the comparables proposed by the appellant, viz., Braithwaite and Bharat Wagon, (without prejudice and in response to the additional comparables selected by the TPO), completely ignoring that the same are identical in functional profile to the comparables introduced by the TPO for undertaking benchmarking analysis of international transaction of main line (MLN) segment applying TNMM, not appreciating that the said companies satisfy the test of comparability as provided in Rule 10B(2) of the Rules? 3. Whether on the facts and in the circumstances of the case, the Tribunal erred in law in upholding the addition made by the TPO on account of intra-group services related to management support by President and his team, human resources, Six Sigma and operation, and quality and other services, received by the appellant from its associated enterprises, on the erroneous reasoning that such services, rendered by the AEs are in the nature of shareholders activities and of no economic and commercial value to the business of the appellant?” Issue notice of appeal.
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