TaxTMI 
TaxTMI 
2023 (8) TMI 449
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....le-2(1)(2), Vadodara ('the Ld. AO') under the directions of Honourable Dispute Resolution Panel ('Hon'ble DRP'), erred in making an adjustment of Rs. 4,17,26,088/- in relation to the international transaction of sale of goods to Associated Enterprises ('AE'). It is prayed that the additions made by the Ld. AO in relation to the international transaction of sale of goods to AEs be deleted. 2. On the facts and circumstances of the case and in law, the Ld. AO under the directions of Hon'ble DRP erred in not allowing the benefit of + 5% range as per Section 92C(2) of the Income-tax Act, 1961 ('the Act') in relation to the international transaction of sale of goods to AEs. It is prayed that the Ld. AO be directed to grant range benefit in accordance with law. The Appellant craves leave to add, alter, amend or withdraw all or any of the Grounds of Appeal." We shall first take up assessee's appeal for A.Y. 2009-10 4. The brief facts of the case are that return of income for A.Y. 2009- 10 was filed on 30.09.2009 declaring total income of Rs. 4,61,39,040/-. The Transfer Pricing Officer (in short "TPO") in the order under Section 92CA(3) of the....
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....f valves and other products whereas the assessee is not able to pass such cost escalation. In view of the above, the assessee submitted that GTN may be excluded from the set of comparables. Further, in the alternative, the assessee also requested for exclusion of Tyco Sanmar Ltd. on a GTN, both from set off comparables in case export filter at > 25% is adopted. Further, after excluding GTN and Tyco Sanmar Ltd., the assessee gave a final set of four comparables. However, DRP rejected both the arguments of the assessee. The DRP noted that while the assessee is a 100% export oriented unit, the assessee did not choose to apply any "percentage of export" as a filter, which itself vitiates the benchmarking study of the assessee. Further, even in the hearing before the DRP, the assessee failed to explain why export sales were not used as a filter when the assessee is a 100% export oriented unit. Further, the DRP was of the opinion that the export revenue filter should not be further reduced below 50% only with the sole purpose of finding more comparables as it would amount to compromising on the quality of comparability and vitiate the process of benchmarking. Further, the DRP held that, ....
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.... given a specific direction to exclude GTN from the set of comparable and to conduct a fresh comparability analysis. However, in the set-aside proceedings, again the same exercise was repeated by the Ld. TPO and later upheld by DRP and the benchmarking analysis was completed by taking into consideration only one entity i.e. GTN, which was also the case in the first / initial set of proceedings. Accordingly, it was submitted that the directions of Hon'ble ITAT have been not followed by the Revenue authorities wherein the ITAT had given a specific direction to conduct a fresh study by comparing the same or similar products so that a fair picture of the profit could be arrived in order to asserting whether the TP Adjustment is required to be made or not. Before us, the Counsel for the assessee submitted that adopting an export filter of above 50% would serve no fruitful purpose considering assessee's line of business, since there would not be many companies with whom a comparison could be made. It was keeping in view the aforesaid fact that the Ld. TPO relaxed the export filter to > 25% so that additional companies could come within the fold of comparability analysis. However, the TPO....
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....ntirely a different product, although it is named as valve. Although, it is true that the method adopted is TNMM, under this method the product is broadly compared. However, in the present case, the TPO has sought to compare the valves which is a consumer product with the industrial product of the tested party, which in our view, would not give a true picture of the profit. Under these facts, it would subserve the interest of justice if a TPO conduct a fresh study comparing the same or similar product, so that a fair picture of the profit could be arrived in order to ascertain whether the TP adjustment is required to be made or not. Therefore, we hereby set aside the order of the authorities below and restore these issues before the TPO for conducting a fresh transfer price study for the purpose of finding out the nature of product, its market, geographical location, etc. as given under OECD guidelines regarding the comparability of the comparables. While doing so, the TPO would afford opportunity to the assessee for submitting fresh T.P. study comparables. However, it is made clear that the TPO would restrict his study to the financial year under consideration unless he feels that....