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2020 (1) TMI 779 - AT - Income TaxTP Adjustment - international transaction entered into by assessee with its associated enterprises - Comparable selection - comparables have earned losses - HELD THAT:- Current year is to be taken into account but the test for 3 consecutive years which means 2 years preceding the current year or also to be taken into account in the event there are factors which could influence the determination of transfer prices. In the present facts of case the authorities below has not considered the situation of these 2 companies in the immediately preceding 2 assessment years relevant to the assessment year under consideration. Merely because these companies have earned losses for the year under consideration would not lead to its exclusion without analysing as per rule 10 B (4) refer to herein above we are thus of opinion that DRP is to analyse the financials of immediately to preceding assessment years. Accordingly, we set aside these comparables back to DRP for re-examining financials, on the basis of Rule 10B(4). Assessee is directed to provide all relevant details in respect of these companies before DRP. Satisfaction of 75% trading filter - We are unable to discern the impact of manufacturing activity on turn over of the comparable company. Assessee do not object the functional similarity of this company. We direct Ld. AO/TPO to call for information under 133(6) of the Act from this company and then decide in terms of filters applied.
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