TMI Blog2016 (8) TMI 861X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the said concern, wherein the 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 ₹ 143 crores as against the turnover of assessee at ₹ 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee was a joint venture between Tata Auto comparables Systems Ltd. and Yutaka Japan. The assessee was engaged in the business of manufacture and sale of components viz. suspension products i.e. springs and bars, exhaust manifold mufflers for motor bikes, brake disks for two wheelers in the automobile sector. The assessee had entered into international transaction with its associate enterprises, against which the Assessing Officer made a reference under section 92CA(1) of the Act to the Transfer Pricing Officer (TPO) to compute arm's length price of international transaction entered into by the assessee with its associate enterprises. The assessee had benchmarked the international transaction with its associate enterprises by app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eous expenses have been taken at ₹ 1.76 cr. instead of ₹ 1.97 cr. appearing in the Profit Loss Statement of ANG Industries Limited for the impugned FY 2007-08. c) The foreign currency gain/loss have been taken to be part of operating profits as directed by TPO and the same should have been taken as part of operating profits in the aforesaid working. d) The figure of total cost taken by TPO excludes depreciation of ₹ 3.55 cr. which is considered in the revised working. e) The revised OP to Sales comes to 19.73% 5. The TPO however, rejected the case of assessee on major points and re-worked the PLI in the case of ANG Industries Ltd. at 20.59%, the mean PLI of comparables worked out to 13.33% and tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of assessee at ₹ 54 crores. In view of size, volume, turnover and other factors, the plea of the assessee before the CIT(A) was that the concern M/s. ANG Industries Ltd. should be excluded while benchmarking the international transactions of the assessee. It was also explained by the assessee that the said concern was mechanically and inadvertently included in the list of comparables by assessee itself. However, the concern should be excluded because of functional differences. An alternate plea for adjustment of expenses was also made by the assessee before the CIT(A). The CIT(A) held as under:- 3.1.5 I have considered the arguments of the Appellant. I find that the Appellant had selected ANG Industries Limited as a comparable c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence of the availability of comparable auto component segment. In view of this factual position, I hold that this company is not comparable on the ground that its product mix is not comparable with the Appellant. I direct the learned AO to exclude the company from the list of the comparable companies. 3.1.9 As the main Ground of Appeal on this issue is declared in favour of the Appellant, the alternative Ground of Appeal on this issue on granting adjustments for various differences has become infructuous, hence is dismissed. 8. The Revenue is in appeal against the order of CIT(A). 9. The learned Departmental Representative for the Revenue placing reliance on the order of Assessing Officer pointed out that the said concern ANG ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ANG Industries Ltd. as comparable in the final set of comparables. The contention of the assessee was that though it had picked up the said concern as comparable in its TP study report, but because of the changed circumstances, the said concern was not comparable being functionally different. The first aspect of the issue is that where the assessee had picked up the concern as comparable in its TP study report, can the said concern be excluded while benchmarking international transaction of the assessee. 12. We find that the said issue is squarely covered by the Special Bench of Chandigarh Tribunal in the case of Quark Systems Pvt. Ltd. reported in 132 TTJ 1 (Chandigarh Trib). Applying the said proposition laid down by the Chandiga ..... X X X X Extracts X X X X X X X X Extracts X X X X
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