TMI Blog2024 (3) TMI 1008X X X X Extracts X X X X X X X X Extracts X X X X ..... uired to be excluded. Accordingly, the learned Transfer Pricing Officer is directed to exclude Golden Chemical Pvt. Ltd. from the comparability analysis. The appeal of the assessee on this issue succeeds. Comparable Nilchem Industries Ltd. - We find that in the remand report proceedings, the learned Transfer Pricing Officer included the above comparable company i.e. Nilchem Industries Ltd. having the margin of 10.78%. The assessee did not object to this comparable company for its exclusion but provided the correction in the margin. The learned Transfer Pricing Officer recomputed the margin of (-) 3.23%. Thus, we find that Nilchem Industries Ltd. is a comparable not in dispute between the assessee and TPO, could not have been excluded by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n adjustment of INR 1,66,15,022/- by virtue of computation of arm's length price of international transaction of import of raw materials and import of finished goods and spares from AEs vide its impugned order dated May 09, 2022. 2. Unjust rejection of Comparable Uncontrolled Price Method as the most appropriate Method: On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in upholding/confirming the action of the Id. TPO in unjust/erroneous rejection of Comparable Uncontrolled Price ( CUP ) Method as the most appropriate method for purchase of raw materials and finished goods and adopting Transactional Net Margin Method ( TNMM ) for the purpose of benchmarking the international transactions between the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with respect to the transfer pricing adjustment of ₹1,66,15,022/-. 04. Brief facts of the case shows that assessee is a company engaged in the business of manufacturing and trading of ceramics, crits, glazes, colors and digital inks. It filed its return of income on 30th November, 2012, at a loss of ₹4,00,81,644/-. The case of the assessee was picked up for scrutiny by issue of notice under Section 143(2) of the Income-tax Act, 1961 (the Act) on 13th September, 2013. 05. As the assessee has entered into international transaction reference was made to the Dy. Commissioner of income Tax, transfer pricing, 4(2)(2), Mumbai [ the ld TPO] for determination of Arm's Length Price of the international transaction. According to the fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raised are in different currencies, whereas, the chart furnished to support the Comparable Uncontrolled Price (CUP) and its conversion is different. Therefore, show cause notice was issued to the assessee and after considering the reply of the assessee, the learned Transfer Pricing Officer proposed to adopt the Transaction Net Margin Method (TNMM), as The Most Appropriate method. Assessee, however, supported the CUP method as the most appropriate method. Assessee also carried out the analysis adopting TNMM, taking the Associated Enterprises as tested party. The learned Transfer Pricing Officer held that the benchmarking considered by the assessee is not reliable taking the foreign party as tested party where the inadequate data is availabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d as the most appropriate method. Thus, TNMM was held to be the MAM. . The assessee submitted certain additional evidences which are admitted and thereafter report of the learned Transfer Pricing Officer was also obtained which was replied by the assessee. After discussion and considering the reply of the assessee, six comparable companies were selected whose average PLI was considered as 2.47% and assessee s PLI was computed at (-) 5.10% and accordingly, transfer pricing adjustment of ₹1,66,15,022/- was confirmed. 010. The assessee is aggrieved with the same. Before us, it was contested that assessee is aggrieved with inclusion of one comparable in the comparability analysis namely Golden Chemical Private Limited having PLI of 8.88%. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this assessment year is only for 9 months starting from 1st April, 2011 to 31st December, 2011. As the relevant financial data of comparable company is available only for 9 months, whereas, the accounting period of the assessee is for 12 months and in absence of non-availability of the data in case of comparable company from 1st January, 2012, to 31st march, 2012, as same being Private Limited company, the above comparable for this reason is required to be excluded. Accordingly, the learned Transfer Pricing Officer is directed to exclude Golden Chemical Pvt. Ltd. from the comparability analysis. The appeal of the assessee on this issue succeeds. 016. The second argument of the assessee is with respect to comparable Nilchem Industries Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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