TaxTMI 
TaxTMI 
2026 (7) TMI 774
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....21-22. 2. The grounds of Appeal are as under:- "On the facts and circumstances of the case and in law, the Appellant craves to prefer an appeal against an order dated 10 September 2024 passed by the Assessment Unit, Income Tax Department (hereinafter referred to as 'Ld. AO') under section 143(3) r.w.s 144C(13) and 144B of the Income-tax Act, 1961 ('the Act') in pursuance to the directions dated 23 August 2024 issued by the Hon'ble Dispute Resolution Panel ('DRP') u/s. 144C(5) of the Act, on the grounds set out herein: 1. Ground No.1 - Transfer Pricing ('TP') adjustment amounting to INR 12,44,40,596 in respect of the international transaction pertaining to purchase of raw material. ....
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....and circumstances of the case and in law, the Hon'ble DRP also erred in rejecting the additional comparable company 'Iftex Oil and Chemicals Ltd. proposed to be included by the Appellant, alleging the same to be a persistent loss-making company being contrary to the facts on record 1.4 That on the facts and circumstances of the case and in law, while making the aforesaid TP adjustment, the Ld. TPO erred in adopting the following approach: 1.4.1 Erroneously rejecting functionally comparable company - "GP Petroleums Ltd. selected by the Appellant in its TP Study. 1.4.2 Arbitrarily selecting two companies namely, Pratap Tex-Chem Pvt. Ltd. and Quaker Chemical India Pvt. Ltd.' as comparables for determinati....
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....er dated 31/10/2023 u/s 92CA(3) of the Act of Rs.12,44,40,596/-. 4. During the proceedings before the DRP, Assessee filed additional grounds of objection seeking additional comparables namely Iftex Oil and Chemicals Ltd. and Universal Petrochemicals Ltd. As per the Assessee, those 2 Additional comparables fulfill all the filters applied by the TPO and the same are deserves to be considered in the final list of comparables. However, DRP held that both the Additional comparables filed by the Assessee in the additional grounds of objections are not proper comparable. The findings of the DRP is reproduced as under:- "Discussion of Issue: "Additional" Comparables proposed by Applicant: Cherry-picking of entities with Low mar....
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.... 8.91% 1.1 Savita Oil Technologies Ltd. 9.83% 12 Tashkent Oil Company Pvt Ltd 5.93% 13 Universal Petro Chemicals Ltd. 0.41% 14 Valvoline Cummins Pvt. Ltd. 15.68% 35th Percentile 4.86% 65th Percentile 9.83% Median 7.38% It can be seen from the selections that the comparables have very low margins. Even 1 has miniscule, one has a negative margin. These comparables were not adopted in the Transfer Pricing Study Report based on applicant's own quantitative and qualitative filters and criteria. But upon audit by the Transfer Pricing Officer, the applicant has introduced these so as to push the medical value down. Filter Iftex Oil and Chemicals Ltd. Universal....
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....tent loss" filter. No Disclosure of the Search process or other Resulting "Additional" Comparables: There has been no discoloured regarding Search Process. Further, it is not understood how exact 2 comparable companies with negative/low profitability are discovered after the Transfer Pricing proceeding, while no other additional comparables were found. This is a blatant and clear case of cherry-picking so as to push the median margin down and the Panel has no hesitation in rejection of these comparables. 5. The Ld. Counsel for the Assessee arguing on Ground No. 1 of the Appeal submitted that, in the Assessment Years 2020-21 and 2018-19 the said Companies namely Universal Petrochemical Ltd. andIftex Oil and Chemical....
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....3% 12 Tashkent Oil Company Pvt Ltd 5.93 13 Universal Petro-Chemicals Ltd. 0.41 14 Valvoline Cummins Pvt. Ltd. 15.68% 35th Percentile 4.86% 65th Percentile 9.83% Median 7.38% 7. We have heard both the parties and perused the material available on record. In the assessment year 2020-21, the Ld. TPO included Universal Petrochemical Ltd. and in Assessment Year 2018-19, the Ld. TPO has included Iftex Oil and Chemicals Ltd. in the final set of comparables for determining the Arm's Length Price.The Revenue has not disputed the functional comparability of those companies with Assessee's manufacture segment for those years under consideration. For the sake for ready reference, the relevant portion of t....