9911796707
TMI Blog2016 (8) TMI 861X X X X Extracts X X X X X X X X Extracts X X X X ..... ned CIT(A) has erred in directing the Assessing Officer to exclude ANG Industries Limited from the list of comparable companies. 2. On the facts and in the circumstances of the case, learned CIT(A) has erred in holding that this company is not a comparable without appreciating the fact that the assessee has taken the stand of excluding this company as the PLI of the comparable company is 20.59 and by removing this as a comparable, the assessee is able to project that its international transactions is at Arm's Length Price (ALP). 3. The only issue raised by the Revenue in the present appeal is against exclusion of ANG Industries Ltd. from final list of comparables while benchmarking the international transaction undertaken by the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at 7.72% at page 3 of TPO's order. The assessee was thus, show caused as to why an adjustment to the extent of Rs. 3,08,41,000/- should not be made in the hands of assessee. The assessee explained that PLI of ANG Industries Ltd. was not correctly worked out for the under-mentioned reasons:- "a) Miscellaneous income of non operating nature Rs. 0.03 cr. should not have been added to sales. b) Miscellaneous expenses of Rs. 1.76 cr. should not have been reduced from cost but ought to have been considered as part of total operating expenses and therefore deducted from operating profits which has been done by the assessee in working out its operating profits consistent with the stand taken by TPO and followed in other peer companies' working o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her pointed out that ANG Industries Ltd. was engaged in the manufacture of heavy vehicles spare parts and trailers and the segmental details in this regard were not available. On the other hand, the assessee was an in-house research group company of Tata Auto Comp group and was supplying suspension products, exhaust systems to Tata Motors for its passenger cars and sports utility vehicles. It was further pointed out that in major corporate restructuring, subsidiary company ANG Auto Tech Pvt. Ltd. was amalgamated with ANG Industries Ltd. w.e.f. March, 2007 and because of the said amalgamation, the concern became well diversified company. Further, the turnover of ANG Industries Ltd. was Rs. 143 crores as against the turnover of assessee at Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.1.7 Similar reference can be found on paqe 29 of the Annual Report, which is as under: Revenue (net sales) The company's revenue grew by 22.89% over the previous year on account of the following factors. * A significant growth in the trailer business: * Improved demand in the Indian under-carriage market, accelerating the company's auto component sales. * Successful performance of products like W-series of fully dressed trailer axles 3.1.8 Further perusal of the Annual Report shows that the Company has not shown separate income from the trailers segment. Therefore, it would be incorrect to compare financial results of this company with the Appellant company in absence of the availability of comparable auto component segm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ries and was operating from its plant site at Pirangut in Pune. The assessee had benchmarked its international transaction by applying TNMM method and operating profit / operating sales ratio was taken as the PLI in TNMM analysis. The assessee had worked out its PLI at 10.50%. However, the TPO during the course of assessment proceedings, re-worked the PLI of assessee company at 7.72%. The assessee on the other hand, had picked up three concerns as comparable whose arithmetic mean of PLI worked out to 9.39%. The TPO during the course of proceedings had re-worked the PLI of three concerns and the average mean was worked out at 13.41%. The assessee is aggrieved by inclusion of ANG Industries Ltd. as comparable in the final set of comparables. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said fact has been reported by the company. Further, the reason for growth in business was also attributed to the growth in trailer business. The turnover of ANG Industries Ltd. was Rs. 143 crores as against the turnover of assessee at Rs. 54 crores declared by the assessee, which is not the sole criteria to reject the said concern. However, where the concern had entered into other line of business and in the absence of segmental profits in respect of two businesses carried on by the said concern, we hold that the said concern ANG Industries Ltd. is not functionally comparable to the assessee and hence, the same is to be excluded from the final set of comparables. Upholding the order of CIT(A) in this regard, we dismiss the grounds of app ..... X X X X Extracts X X X X X X X X Extracts X X X X
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