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2021 (10) TMI 955 - ITAT DELHITP Adjustment - Comparable selection - grievances of the assessee that the appellant ought not to be considered as tested party, comparables selected by the TPO who are functionally different from the assessee having different business module and not granting the appellant the option to choose a price that falls within the ±5% range of arithmetic mean of comparables as contemplated under proviso of section 92C(2) - HELD THAT:- Merit in contention of assessee that Comparables selected by the TPO are functionally different on account of the fact that the assessee did not have its own manufacturing facility, the business model of the assessee is quite different coupled with fact that the appellant is operating only in domestic market whereas the comparables namely Rane (Madras) Limited and Gabriel India Ltd. had sufficient export turnover. We are conscious of the fact that two companies cannot be compared with accurate arithmetic precision; however, the factors that would influence the profit margin substantially should be kept in mind while rejecting the comparables. In the present case, this is first year of operation; the appellant does not have its own manufacturing facilities and is purely operating in domestic market. In our considered view, these factors certainly would have substantially impact on the profit margin of the assessee. Therefore, findings of the authorities below cannot be sustained under the facts and circumstances of the present case. The impugned order is therefore hereby set-aside and the issue of computation of Arm's Length Price is restored to the file of the Assessing Officer. The Assessing Officer would refer the matter to the TPO for making search for fresh set of comparables, who accordingly, recommend the computation of Arm's Length Price afresh. The grounds raised by the assessee are allowed for statistical purpose only.
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