TMI Blog2019 (12) TMI 456X X X X Extracts X X X X X X X X Extracts X X X X ..... egoing discussion, it is held that the authorities below were fully justified in holding that the Manufacturing segment cannot be aggregated with the Distribution segment and both need to be benchmarked independent of each other. We, therefore, accord our imprimatur to the view canvassed by the TPO in rejecting the aggregation approach adopted by the assessee. Once it is held that the international transaction of the Production segment is required to be benchmarked separately, then the next question is the determination of the ALP. The ld. AR candidly admitted that if the aggregation is not to be done, then there is no flaw in the computation of the ALP and the consequential transfer pricing addition in the final assessment order. We, therefore, uphold the transfer pricing addition in the international transaction of Production segment. - ITA No.1049/PUN/2017 - - - Dated:- 9-12-2019 - Shri R.S. Syal, Vice President And Shri Partha Sarathi Chaudhury, Judicial Member For the Assessee : Shri Dinesh Supekar For the Revenue : Shri T. Vijaya Bhaskar Reddy ORDER PER R.S.SYAL, VP : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Resolution Panel (DRP) for aggregation of the Distribution and Production segments was repelled. However, the DRP got convinced with the assessee s submission on inclusion of one more company, namely, UMS Technologies Ltd. (Engine Segment), which had the effect of reducing the amount of transfer pricing addition to ₹ 2,74,71,715/-, which has been assailed in the instant appeal. 3. We have heard the rival submissions and gone through the relevant material on record. Though the assessee has raised five grounds, but the thrust of the arguments of the ld. AR was only to the aggregation of Production and Distribution segments. We have gone through the Statement of Profit and loss of the assessee for the year under consideration, a copy of which has been placed at page 106 onwards of the paper book. Total `Revenue from operations stands at ₹ 78.94 crore, whose bifurcation has been given in Note no. 19. In addition to Commission income and Revenue from sale of services, the assessee earned Revenue from sale of finished goods at ₹ 18.03 crore (i.e. Manufacturing segment) and Revenue from traded goods at ₹ 30.20 crore (i.e. Trading segment). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2F(v) is meant for identifying a transaction, the term `transaction in rule 10A(d) is meant for determining the ALP of international transaction under the relevant rules. 6. In the present context, we are concerned only with the definition of `transaction as given in rule 10A(d). It, therefore, boils down that in so far as the determination of the ALP under the machinery of computation under the methods as given in Rule 10B is concerned, the term transaction also includes a plural of transactions. However, the caveat is that in order to be aggregated within the term transaction under Rule 10A(d), it is sine qua non that such number of transactions must be closely linked. If these are not closely linked transactions, then they cannot be aggregated for determination of the ALP under the IT Rules. 7. The moot question is whether the transactions of the assessee in Production and Distribution segments can be construed as closely linked transactions ? At the cost of repetition, it is mentioned that whereas the Production segment covers the full diesel engines manufactured by the assessee in India and exported to its AEs, the traded goods se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ake all or leave all), then also it is one international transaction. In that case, it will be on the assessee to prove that although each is priced separately, but they were provided under one composite agreement. It still further held that aggregation can be done when albeit each transaction is priced differently, but they are so inextricably linked that one cannot survive without other. 9. When we test the facts of the instant case on the touchstone of the principles enunciated by the Hon ble High Court, it becomes overt that the transactions of Production and Distribution segments cannot be clubbed because it is neither a case of package deal nor the two sets of transactions are structured in such a manner that the assessee has no option to accept one and reject the other nor they are so inextricably linked that one cannot survive without other. In fact, in all the earlier years, the assessee was exclusively in the trading of components and the manufacturing activity started at the fag end of the preceding year only. 10. The assessee in Magneti Marelli Powertrain India Pvt. Ltd. vs. DCIT (2016) 389 ITR 469 (Delhi) entered int ..... X X X X Extracts X X X X X X X X Extracts X X X X
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