TaxTMI 
TaxTMI 
2026 (5) TMI 177
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....f Rs. 5.51,58,655/- to the price received by the appellant from its Associated Enterprise. 3. The Ld. TPO has erred in applying "trading income filter" (greater than 50% of total revenue) "export service income filter" (greater than 25% of the total revenue) and used inappropriate keywords for search process in the benchmarking analysis. 4. The Id. TPO/Ld. DRP erred in rejecting the TP study of assessee company without satisfying the conditions laid down w/s, 92C(3) of the Income Tax Act, 1961 ("Act"). 5. The Ld. TPO/ Ld. DRP ought to have accepted the Profit margin of the assessee company (OP OC) of 5.69% as having complied with the arm's length principle. 6. The Ld. TPO/Ld. DRP erred in considering the entire transportation and handling charges for goods as operating in nature without considering the exceptional circumstances and erred in computing the PLI by considering abnormal portion of Transportation and handling charges as operating expenditure. 7. The Ld, DRP ought to have accepted the adjustment made on account of exceptional circumstances to the final set of comparables due to Covid- 19 which pandemic impacted the whole wo....
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.... company is not into any manufacturing and hence the adjustments cannot be made on the basis of 3 companies, M/s Nalwa Steel and Power Limited, M/s Rungta Mines Limited and Shyam Sel and Power Limited. Since the appellant company is not engaged in the manufacturing, extracting iron or coal, they pleaded that the comparables of these three companies should be excluded. 4. Before the Ld.DRP also, the same arguments were taken. In their directions u/s. 144C(5) of the Act, the Ld.DRP concurred with the view of Ld.AO, where it was held that the TP study made by the Ld.AO is correct and proper care was taken by the Ld.AO in taking the comparable companies while making the addition. At page No.7, the Ld.DRP has stated that the appellant company as well as the comparable companies are operating in the same business of producing ferrous products including those derived from the direct reduction of iron ore. Since the above 3 companies are in the same field, it was held that they are functionally comparable to the assessee company. Since the comparable company and the appellant company are selling iron ore, billets and they are also in the business of production and sale of TMT/rolled pro....
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....nt company is totally into only trading, i.e. purchasing and selling iron ore and coal. In this case, the appellant company claims that it is engaged in trading of iron ore and coal without any further processing and during the impugned year, the company sold goods worth Rs. 181.35 cores to its AEs, GMT Global Impex Pte Ltd and TNMM method was applied, as the activities of the appellant company and the comparable companies are functionally dissimilar, the ALP cannot be computed by taking into consideration the financials of those companies into consideration. The Ld.AR of the appellant company has also emphasized that even the transportation charges were being adjusted while computing the ALP. It was argued that during COVID period, the appellant company had to incur higher charges while transporting the goods and in the absence of any finding relating to inflation of expenses, the Revenue cannot make adjustment with regard to transportation charges. Finally, the Ld.AR of the appellant placed reliance on the decision of Hon'ble ITAT Delhi in the case of M/s Golden Agri Resources (India)(P.) Ltd. [2024] 161 taxmann.com 19 (Delhi-Trib), where it was held that the companies engaged in....
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....the applicability of "other method". This difference is minuscule when considered with the total value of international transaction of Rs: 729 crores. [Para 19) Considering the facts of the case in totality there is no merit in the impugned adjustment, therefore, the Assessing Officer/TPO is directed to delete the addition of Rs. 48.63 crores. [Para 20]" 5.2. In view of the above, the Ld.AR of the appellant prayed that the Tribunal to consider these submissions and direct the Revenue to exclude the above 3 comparables from the final set of comparables to arrive at the correct ALP. If these 3 companies are excluded, there cannot be any adjustment, which can be made to the ALP. In other words, the Ld.AR of the appellant company has argued that the entire addition should be deleted. 6. The Ld.DR relied on the order of the TPO/AO and the Ld.DRP, where the officers have held that correct comparables were taken while making the ALP adjustment and for the reasons mentioned in their orders, the addition made should be confirmed. 7. After hearing both sides, the Bench decides to set aside the matter to the file of the Ld.DRP with the following directions : (a) It ....
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....il 2026. ============= Document 1 1. Nalwa Steel and Power Limited: Contention before the Ld. TPO Contention before the Ld. DRP before Contention Hon'ble ITAT the Functionality: As mentioned in the extract of financial statements of the comparable it is evident that the comparable company is engaged in manufacturing of sponge iron, wired rod & RIB Bar. Functionality: Functionality: Assessee contended that comparable company is engaged in trading of sponge iron, wired rod & RIB Bar whereas the assessee is engaged exclusively in trading of iron ore and also coal by acquiring it from local markets as per requirement of clients and selling them without any further processing. Assessee contended that comparable company is engaged in manufacturing and trading of sponge iron, wired rod & RIB Bar whereas the assessce is in engaged exclusively trading of iron ore and also cool by acquiring it from local markets as per requirement of clients and selling them without any further processing. Export filter: Nalwa Steel and Power limited has failed to meet the export/sales filter, TPO rejected the contention of the assessee. the company's exports am....