TaxTMI 
TaxTMI 
2026 (6) TMI 233
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....ity/mark-up of assessee from international transactions (AEs) is more than profitability/mark-up from independent transactions (non AEs) and therefore international transactions are at Arm's length. 3) That DRP failed to appreciate; the functional, assets and risk profile of assessee and that some of the companies taken by TPO cannot be considered comparables as they had different Functional, Assets, Risk profile, cost structure, inconsistent performance, special/different economic circumstances and DRP further erred in upholding arbitrary filters applied by TPO 4) That DRP/TPO failed to correct errors in computation of operating profit mark-up of assessee and comparables. 5) That DRP/TPO erred in not allowing assessee the benefit of (+/-) 5% mentioned in the proviso to section 92C(2) of the Act. The assessee craves leave to alter, amend or withdraw all or any grounds herein or add any further grounds as may be considered necessary either before or during the hearing. 4. Briefly, the assessee Cornell Overseas Private Limited, is engaged in the business of manufacturing and export of readymade garments for ladies and children and home furni....
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....ity mark-up from independent transactions 4.5% (non AEs) and therefore, international transactions are at arm's length using internal TNMM. 9. With respect to ground no. 3 & 4, the ld AR stated that the total no. of comparable companies taken by TPO in TP order is 17. It is submitted that the search is carried by TPO for companies operating in Apparels (Readymade Garments) Segment as well as companies where there is no manufacture of garments and the companies where there is fabric manufacturing and yarn manufacturing. Broadly assessee seeks exclusion of 10 companies on following grounds and inclusion of Meenakshi (India) Ltd (already directed by DRP but not taken by TPO as follows: A. Companies in retail business with retail outlets - As per Rule 10B(2), companies operating in retail market are not comparable to wholesale as they have different FAR profile. The assessee is a manufacturer and wholesale exporter of readymade garments. B. Manufacturer of fabric and/or yarn - (i) Manufacture of fabric and /or yarn is different industry which is not comparable to Readymade garments (Apparels). (ii) This is supported by the fact that TO applied....
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....rofile filter) and companies having forex/sales less than 75%. S.N. Name of Company FAR and/or Merger Forex/sales% OP/OC (as per TPO) Our submission 1 Cantabil Retail India Ltd. Fails FAR filter NIL 10.86 Excluded because it fails both FAR and forex filter 2 Euro Fashions Inners P. Ltd. NIL (-)2.92 Excluded because it fails forex filter 3 Integra Apparels & Textiles Ltd. 55% 9.06 Excluded because it fails forex filter 4 Kitex Ltd. Fails FAR filter 0.5% 4.07 Excluded because it fails both FAR and forex filter 5 Nash Fashions (India) Ltd. 76% (-)0.93 6 Vogue Textiles Ltd. Fails FAR filter 71% 3.79 Excluded because it fails both FAR and forex filter 7 CigFil Ltd. (Seg) NIL 27.52 Excluded because it fails forex filter 8 Cravatex Ltd. (Seg) 89% 2.68 9 Evinix Accessories (Seg) Fails FAR filter 26% 14.56 Excluded because it fails both FAR and forex filter 10 Rana Polycot Ltd. (Seg) 67% 6.42 Excluded because it fails forex filter 11 G....
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....d [2018] 90 taxmann.com 85 (Delhi - Trib.) - ii. Lummus Technology Heat Transfer BV [2014] 42 taxmann.com 342 (Delhi - Trib.)- iii. Messe Dusseldorf India (P.) Ltd. [2018] 90 taxmann.com 159 (Delhi - Trib.) iv. Paradigm Geophysical (I) (P.) Ltd [2016] 72 taxmann.com 108 (Mumbai - Trib.) v. Honeywell Electrical Devices & Systems India Ltd [2014] 42 taxmann.com 223 (Chennai - Trib.) - vi. Your Lifestyle (P.) Ltd [2018] 94 taxmann.com 446 (Mumbai - Trib.) 16. We find that where the transactions are so intertwined so that segregation is difficult, profitability should be ascertained at entity level. Where transaction can be segregated, the law mandates that profitability from AE Transactions can only be benchmarked and not profitability at entity level. In the case of the assessee, the assessee has maintained segmental accounts, certified by the CA, and hence we agree with the assessee that the Assessing Officer has committed mistake in determining the profitability at entity level instead of international transactions. 17. We however, are of the opinion, that where the TPO applies External TNMM method, the comparables companies chosen....