2016 (5) TMI 1098

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....ed to as AO") and the DRP have erred in proposing a transfer pricing adjustment of Rs. 1,30,72,762 /- under section 92CA(3) of the Act, in respect of the international transactions entered into by the Appellant during the year ended 31 March, 2007. 2. The learned AO and the DRP have erred in rejecting the comparable companies selected by the Appellant to benchmark its international transactions. 2.1 The learned AO and DRP have erred in computing the amount of related party transactions entered into by the comparable company namely Goa Glass Fibre Limited and accordingly erred in rejecting the said comparable as a valid comparable. 2.2 The learned AO and DRP have erred in rejecting six comparable companies selected by the Appellant on ....

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.... submitted, at the very outset that only issue involved in this appeal is that same comparables have been accepted in all prior and subsequent years, there is no change in facts or business of the assessee and in any case no such allegation has been made in the orders by any of the lower authorities. But, in the impugned year i.e. A.Y. 2007-08, surprisingly, the TPO did not accept these very comparables mainly on the ground that they were dealing in different products. The DRP endorsed the order of the TPO without giving any proper reasoning. He drew our attention on the transfer pricing report and transfer pricing orders of earlier years as well as subsequent years to show that same comparables were considered for determination of arms len....

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....l as orders of the preceding and subsequent years as were shown to us. 3.4. The brief facts are that the assessee company is joint venture between M/s. Owens Corning, Inc. USA and M/s. Mahindra & Mahindra Ltd. The assessee was engaged in manufacturing and trading of Glass Fibre reinforcement products. The impugned year (i.e., A.Y. 2007-08) is the 5th year of transfer pricing reference u/s 92CA of the Act. The brief history as noted in the TPO's order is that no adjustment was made in any of the preceding four years. With the assistance of the parties, it has also been noted from the facts brought before us by way of paper book by the Ld. CIT-DR that no TP adjustment has been made even in the subsequent four years i.e. A.Ys. 2008-09, 2009-1....

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....thmetic mean margin of the comparables was 9.96% which was less than the margin shown by the assessee at 13.70%. Thus, undisputedly, on facts, the margin of the assessee was within the permitted range of ALP. We find that adjustment made by the TPO was contrary to law, and therefore, same is directed to be deleted. Since we have deleted the adjustment on primary grounds, we are not deciding other grounds. Accordingly, ground no.1 to 5 of the main grounds may be treated as partly allowed. 4. During the course of hearing Ld. Counsel also drew our attention on the additional ground wherein the assessee has contested the action of AO in increasing the books profits for the purpose of section 115JB by the amount of transfer pricing adjustment o....