2018 (12) TMI 1868

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....tax (Appeals) is contrary to law and to the facts and circumstances of the case. 2. The Learned Commissioner of Income-tax (Appeals)- IT/TP has erred on facts and in law, in deleting the Transfer Pricing adjustment without appreciating the fact that the assessee has bifurcated its trading activity into domestic sale and export sale, but has chosen same set of the comparable companies by following the same strategy in the economic analysis of the Transfer Pricing study report. 3. The Learned Commissioner of Income-tax (Appeals)- IT/TP has erred on facts and in law in accepting the contention of the assessee that the assessee is engaged in the manufacturing activity, when no such details were submitted in TP proceedings. ....

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.... 6. The assessee had divided its operations in two segments i.e. domestic sales and export sales. For the purpose of benchmarking the transactions under the domestic sales and export sales, TNMM method was selected as most appropriate method. The operating profit to operating sales ratio and operating profit to operating cost ratio were taken as PLI in the TNMM analysis, respectively. In case of domestic sales, PLI of assessee was arrived at 4.45%, whereas average PLI of comparables arrived at 8.80%; in the case of export sales, PLI of assessee was 2.86%, whereas the average PLI of comparables was 8.30%. The assessee had selected two companies as comparables on the basis of search conducted. The Assessing Officer was of the view that ther....

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....which remand report was obtained from the TPO, wherein the TPO concluded that there was no logic in bifurcating trading activity into domestic sales and export sales; whereas the case of assessee was that apart from trading of components, it was also engaged in the export of finished goods. The assessee furnished manufacturing process chart before the CIT(A) and various other evidences which were confronted to the TPO, who after examining the additional evidence, had accepted that the assessee company was engaged in manufacturing and trading activity. The Tribunal after taking into consideration all the evidences including additional evidence observed that manufacturing activity was being carried out by the assessee. 10. The learned Auth....