TMI Blog2018 (5) TMI 588X X X X Extracts X X X X X X X X Extracts X X X X ..... ins earned by the assessee then the next pertinent question would be the upper / lower range thereof so as to arrive at meaningful TP study as envisaged by law. So far as the issue of comparables is concerned, we find that under TNMM method, only a broad functional comparability is required and the statute, itself, has provided for a tolerance range of +/-5% to weed out the dissimilarities since no two entities could exactly be the identical / similar in all respect. It is noteworthy that all the comparables under dispute has been selected by the assessee itself and no comparable has been introduced by the revenue and therefore, the more onus was on assessee to justify exclusion / inclusion of two comparables namely Ashco Industries Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecifically asked by the Ld. TPO during assessment proceedings. 4. Ground No.4: The Ld. AO/TPO/DRP have erred in law and on facts and in circumstances of the case in not considering the qualitative data of certain comparable available at the time of assessment proceedings and accordingly: a) Not considering Frontline Electro Medical Ltd in the list of comparable, which was identified as comparable in fresh benchmarking asked by the Ld. TPO and is functionally comparable to the appellant. b) Including Ashco Niulab Industries Ltd. in the list of comparables inspite of the fact that trading income in this company is only 49.96% and rest of the income is from services and segmental Profit and Loss account for trading ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hese transactions have been aggregated for the purpose of determination of ALP . The assessee has reflected turnover of ₹ 190.07 crores and profit margin of ₹ 8.31 Crores which translates into margin of 4.37%. The assessee adopted TNMM method to benchmark the same with profit level indicator [PLI] as operating profit / operating income [OP/OI] and the assessee being the tested party . The average PLI of nine comparables as selected by the assessee based on single year data worked out to 5.46% as against assessee s PLI of 4.37% and therefore, the assessee submitted that the same being within the tolerance range of +/-5%, no TP adjustment was required. However, by applying RPT turnover filter of ₹ 1000 cror ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l pronouncements to support the respective submissions. 4.1 We have carefully perused the rival contentions and perused relevant material on record. Upon due consideration, we find that whole controversy primarily revolves around application of Turnover Filter and functional comparability of the comparables. 4.2 During hearing before us, both the representatives heavily relied upon various judicial pronouncements to demonstrate the relevancy of turnover filter in the TP study, Ld. AR contending that the same was not a relevant factor while Ld. DR controverting the same. However, nothing has been brought on record either in the orders of the lower authorities or during submissions made before us to demonstrate that whether turnov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the comparables initially selected by the assessee could be excluded subsequently, finding them to be functionally or otherwise un-comparable in the circumstances . At the same time, we are of the opinion that there could not be any cherry picking to suit the requirement of the assessee. 4.4 Therefore, keeping in view the overall factual matrix of the case, we are left with no option, but to remit the matter back to the file of Ld. AO / TPO for fresh determination of ALP of the transactions under dispute keeping in view the aforesaid factors. The assessee, in turn, is directed to demonstrate / substantiate his stand in this regard, inter-alia, by undertaking fresh TP study , if the circumstances so demand. 5. Resultantly, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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