Tribunal allows appeals, excludes company for differences, directs use of specific results

The Tribunal partly allowed both appeals for statistical purposes. It upheld the inclusion of HSIL Ltd. as a comparable due to alignment in core activities but excluded Cera Sanitaryware Ltd. for significant differences. The Tribunal directed the use of Murudeshwar Ceramics Limited's vitrified segmental results for analysis. The issue of transfer pricing adjustment for raw materials was restored for the assessee to present its case. MAT credit verification for the assessment year 2016-17 was directed. The Tribunal issued specific directions for each issue, with the order pronounced on August 31, 2023.

---

---

Issues Involved:
1. Exclusion of comparables (HSIL Ltd. and Cera Sanitaryware Ltd.)
2. Consideration of segmental results of Murudeshwar Ceramics Limited.
3. Computation of transfer pricing adjustment for purchase of raw materials.
4. Verification of MAT credit.

Summary:

1. Exclusion of Comparables (HSIL Ltd. and Cera Sanitaryware Ltd.):
The assessee objected to the inclusion of HSIL Ltd. and Cera Sanitaryware Ltd. as comparables. The Tribunal upheld the inclusion of HSIL Ltd., noting that despite its diversified products, its core activity aligns with the assessee's business. The Tribunal found the approach of the Dispute Resolution Panel (DRP) reasonable, as segmental results from consolidated financial statements were reliable. However, Cera Sanitaryware Ltd. was excluded due to significant differences in raw material consumption and the absence of segmental revenue information, making it unsafe for comparison.

2. Consideration of Segmental Results of Murudeshwar Ceramics Limited:
The DRP directed the Transfer Pricing Officer (TPO) to adopt the vitrified segmental results of Murudeshwar Ceramics Limited for comparable analysis and margin computation. The Tribunal recorded no objection from the DRP and directed the TPO to implement this direction.

3. Computation of Transfer Pricing Adjustment for Purchase of Raw Materials:
The Tribunal noted that since the TPO did not dispute the adoption of the Transactional Net Margin Method (TNMM) as the Most Appropriate Method (MAM) and the aggregation of transactions, the assessee should not have any grievance regarding the aggregation. The Tribunal restored this issue to the TPO for reconsideration, giving the assessee an opportunity to present its case.

4. Verification of MAT Credit:
For the assessment year 2016-17, the Tribunal directed the Assessing Officer to verify and allow the Minimum Alternate Tax (MAT) credit, as it was a matter of verification.

Conclusion:
Both appeals were partly allowed for statistical purposes, with specific directions given for each issue. The Tribunal pronounced the order on August 31, 2023.

---