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2018 (5) TMI 588 - AT - Income TaxTPA - ALP determination - application of Turnover Filter and functional comparability of the comparables - Held that:- A perusal of nature of business carried on by assessee reveal that the assessee was engaged in supply of imported biomedical diagnostic equipments which was not a normal line of business but a specialized kind of business requiring not only business skills but also technical skills as well. Upon consideration of material before us, this pertinent question has remained unanswered. As a logical consequence, if turnover filter was, at all, found to be a relevant factor for the margins earned by the assessee then the next pertinent question would be the upper / lower range thereof so as to arrive at meaningful TP study as envisaged by law. So far as the issue of comparables is concerned, we find that under TNMM method, only a broad functional comparability is required and the statute, itself, has provided for a tolerance range of +/-5% to weed out the dissimilarities since no two entities could exactly be the identical / similar in all respect. It is noteworthy that all the comparables under dispute has been selected by the assessee itself and no comparable has been introduced by the revenue and therefore, the more onus was on assessee to justify exclusion / inclusion of two comparables namely Ashco Industries Ltd. & Frontline. AR has brought to our notice the judicial pronouncements to contend that the comparables initially selected by the assessee could be excluded subsequently, finding them to be functionally or otherwise un-comparable in the circumstances. At the same time, we are of the opinion that there could not be any cherry picking to suit the requirement of the assessee. Remit the matter back to the file of Ld. AO / TPO for fresh determination of ALP of the transactions under dispute keeping in view the aforesaid factors
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