TMI Blog2015 (10) TMI 385X X X X Extracts X X X X X X X X Extracts X X X X ..... hich were subject to re-allocation. The change in the net result between the original segmental working and the revised segmental working of margin is clear. In our opinion, the AO should not have taken refuge under an order passed on an earlier rectification petition by the assessee in which it had pointed out the non-consideration of the revised segmental results filed by it. Even that order dated 30-08-2013, in our opinion, was very cryptic. The directions of the DRP has not been properly considered by the lower authorities If the assessee's claim for revised segmental results are found to be acceptable, there is every possibility that pricing of its international transactions would come within +/- 5% of the PLI worked out by the T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the TPO for determining the Arms Length Price (ALP). Assessee had two segments of operations. One was Information Technology Enabled Services (ITES) segment and the other was packaging unit segment. In the ITES segment, it had international transactions worth ₹ 9,32,00,220/-. For justifying the prices charged on the Associated Enterprises (AE), assessee had taken 16 comparables from which an average profit margin of 10.79% of cost was worked out as PLI of the comparables. Assessee had followed TNM method which was accepted by the TPO. The margin shown by the assessee was 13.20% of the cost for the ITES segment as per its own TP documentation. 4. During the course of proceedings before the TPO, assessee filed a revised segmental ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed a rectification letter pointing out the revised margin work-out furnished by it, which was not considered by the TPO. As per the assessee, such rectification petition was not disposed off. Further, as per the assessee non-consideration of the revised segmental results, resulted in a arbitrary addition. As per the assessee, if the revised margin of 20.74% was compared with the average mean of the comparables it would fall within +/- 5% range. Resultantly, according to the assessee there was no need for any adjustment in the ALP. 5. The DRP in its direction dated 29-1 1-2013 u/s 144C(5) of the Act stated as under; 4.1 The assessee has mentioned that it had filed a rectification letter stating that the learned TPO has not conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, learned AR submitted that the assessee pursuant to the directions of the DRP, had submitted before the TPO on 19-12-2013 a letter in which it had given the details of the reallocation of cost in the revised segmental result. As per the learned AR, annexure to the said letter gave the detailed allocation of expenditure between the packaging unit segment and ITES segment, but the AO had not considered it. As per learned AR, its earlier rectification petition was rejected by the TPO through a short order dated 30-08-2013 which did not go into the merits, 8. Per contra, learned DR supported the orders of the lower authorities. According to him, the AO had rejected the revised segmental results since it was already rejected by the TPO purs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Unit Total Revenue 93,200,220 60,563,338 153,763,557 Total Op.cost (TC) 77,188,082 55233342 132,421,424 Op.cost(OP) 16,012,138 5,329,996 21,342,134 OP/TC 20. 74% 9.65% 10. In our opinion, the AO should not have taken refuge under an order passed on an earlier rectification petition by the assessee in which it had pointed out the non-consideration of the revised segmental results filed by it. Even that order dated 30-08-2013, in our opinion, was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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