https://www.taxtmi.com/css/info/rss_sitemap/rss_feed.css?v=1746094055 https://www.taxtmi.com Business/Tax/Law/GST/India/Taxation/Policies/Legal/Corporate Tax/Personal Tax/Vat Law/Legal Information/Tax Information/Legal Services/Tax Services Tax Management India. Com / MS Knowledge Processing Pvt. Ltd. All rights reserved. One stop solution for Direct Taxes and Indirect Taxes https://www.taxtmi.com/caselaws?id=458317 https://www.taxtmi.com/caselaws?id=458317 TP Adjustment - Determination of operating revenue - DRP by ratifying the decision taken by TPO also considered foreign exchange gain as non-operating by applying the Safe Harbour Rules - HELD THAT:- We are of the considered view that in order to compute the operating margin of the taxpayer, foreign exchange gain is to be considered as part of operating income for computing the operating margin of taxpayer as well as comparable companies. So, Ground No. 2 is determined in favour of the taxpayer. Computation of margins of comparable companies - compute the margin of the company considered as comparable by the taxpayer for the purpose of TNMM - When there are apparent discrepancies in the margin in OP/Sales computed by TPO as well as taxpayer, the TPO is directed to verify the margin and to reconsider the same to bring on record the correct margin of the aforesaid comparable companies. So, Ground as determined in favour of the taxpayer for statistical purposes. Selection of comparable companies - ANG Industries Ltd. be excluded as comparable on the ground that the same is engaged in diversified activities and segmental reporting is not available. So, in these circumstances, we find ANG chosen by the TPO/DRP not a valid comparable. Elofic is not a valid comparable keeping in view the diversified market of Elofic and failing the export income to total sales filter. WABCO s provision of catering to after market segment and carrying out significant R D activities benefiting the company makes it incomparable to the taxpayer which is a routine manufacturer. So, we order to exclude WABCO. DRP not providing adjustment on account of high depreciation to the total cost in the case of the taxpayer - Keeping in view the fact that in taxpayer s own case for AY 2009-10, difference in capacity in which the taxpayer is operating and the capacity in which comparable companies are operating were recognised, we are of the considered view that the issue is required to be sent back to the TPO to decide in the light of the revenue s own order in taxpayer s own case for AY 2009-10 and in view of the decisions rendered by the coordinate Benches of the Tribunal (supra). Ground determined in favour of the taxpayer for statistical purposes. DRP not considering cash profits for the purpose of TNMM in order to provide for excessive depreciation in case of the taxpayer vis- -vis comparable companies - When the taxpayer has brought on record the complete analysis of cash profits earned by the taxpayer to be compared with complete analysis of cash profit earned by the comparable companies extracted in the preceding paras, we are of the considered view that the issue is required to be decided afresh by the TPO in the light of the decision rendered in ACIT vs. Gates India (P) Ltd. [ 2017 (8) TMI 282 - ITAT DELHI ] and Schefenacker Motherson Ltd. [ 2009 (6) TMI 125 - ITAT DELHI ] - So, ground is allowed for statistical purposes. Case-Laws Income Tax Wed, 04 Jul 2018 00:00:00 +0530