TMI Blog2022 (8) TMI 198X X X X Extracts X X X X X X X X Extracts X X X X ..... and Manufacturing revenue streams of the two companies, we hold that GIL cannot be considered as comparable. The impugned order is overturned to this extent and this company is directed to be excluded from the list of comparables. Inclusion of Butterfly Gandhimathi Appliances Limited (BGAL) in the list of comparables - It can be seen from the above that GAL merged with BGAL and the transactions of assets and liabilities etc. of GIL have been incorporated in the books of BGAL as on 31-03-2012, which is relevant to the assessment year under consideration. In view of the fact that the figures of this company for the year are influenced by the merger taking place, we hold that the extraordinary financial event makes it incomparable. We, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of traded goods and Sale of finished goods is set aside and the matter is remitted to the file of the AO/TPO for a fresh determination in the terms indicated above. Needless to say, the assessee will be allowed reasonable opportunity of hearing in such fresh proceedings. - ITA No.161/PUN/2022 C.O.No.21/PUN/2022 - - - Dated:- 1-8-2022 - SHRI R.S. SYAL, VICE PRESIDENT AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER Assessee by : Shri M.P. Lohia, Shri Rajendra Agiwal Shri Nikhil Tiwari Revenue by : Shri B. Koteswara Rao ORDER PER R.S.SYAL , VP : This appeal by the Revenue and Cross Objection by the assessee arise out of the order passed by the CIT(A) on 10-12-2021 in relation to the assessment year 2012-13. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ead Manufacturing Function . The AO did not dispute the applicability of the Transactional Net Margin Method (TNMM) as the most appropriate method. Out of four comparables chosen by the assessee, the TPO excluded Gorani Industries Limited and worked out the adjusted arithmetic mean of the Operating Profit/Operating Revenue of the remaining companies at 6.16%. Applying it as arm s length margin, the TPO worked out the transfer pricing adjustment at Rs.7,30,13,424/-. The ld. CIT(A) directed to include GIL in the list of comparables, against which the Revenue has come up in appeal. 5. The ALP determination of the Manufacturing Function has been done by the TPO considering both Trading transactions and Manufacturing transactions of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erger has been taken note of at page 464 of the paper book. Page 519 of the paper book records as under: 7. Merger with Gangadharam Appliances Limited A proposal submitted by erstwhile Gangadharam Appliances Limited (GAL), an associate of the Company, for the merger of its entire undertaking with the Company has been approved by the Hon ble Board for Industrial and Financial Reconstruction (BIFR) vide their order dated 17th August, 2011 with retrospective effect from Ist January, 2009. The Transactions, Assets and Liabilities of GAL has been incorporated in the books of the Company keeping into account the terms of the BIFR Order (supra) and reflected appropriately in the account of the Company as at 31st March, 2012. In terms of the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nst the judgment in the case of Phoenix Mecano (India) Pvt. Ltd. has since been dismissed by the Hon ble Supreme Court in CIT Vs. Phoenix Mecano (India) Pvt. Ltd. (2018) 402 ITR 32 (St.). Similar view has been taken by the Hon ble Bombay High Court in CIT Vs. Thyssen Krupp Industries Pvt. Ltd. (2016) 381 ITR 413 (Bom.) and CIT Vs. Tara Jewels Exports (P). Ltd. (2010) 381 ITR 404 (Bom.). We, therefore, set aside the impugned order on this score and direct that the transfer pricing adjustment should be restricted only to the extent of the international transactions. 11. To sum up, the impugned order on the issue of transfer pricing adjustment of the international transactions of Purchase of Raw Material, Purchase of traded goods and Sale o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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