TaxTMI 
TaxTMI 
2026 (8) TMI 745
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....("the Act") by adopting faulty assessment procedure to finalize the adjustment, such as, but not limited to, rejection of transfer pricing study, analysis of the functions carried out by the Appellant and those of the comparable companies and erroneous computation of profit margins of the comparable companies. 2. The Ld. TPO has grossly erred, in law and in facts, by not accepting the economic analysis undertaken by the Appellant in accordance with the provisions of the Act read with the Income Tax Rules, 1962, ("the Rules") and undertaking a fresh economic analysis for the determination of the arm's length price in connection with the impugned international transactions and thereby. holding that the Appellant's impugned transactions are not at arm's length. 3. The impugned order passed by the Ld. AO under section 143(3) r.w. section 144C(13) of the Act is contrary to the law, facts, and circumstances of the case. Grounds of appeal in relation to adjustment made on international transaction involving export of barite (INR 4,86,74,832): 4. The Ld. TPO and Ld. AO have grossly erred, in law and in facts, by unreasonably rejecting one com....
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....barred, invalid and void as held by the Hon'ble Madras High Court in the case of CIT vs M/s. Roca Bathroom Products Private Limited and M/s. Freight Systems (India) Private Limited in Writ Appeal Nos. 1517, 1519, 1609, 1610 and 1854 of 2021." 2. The assessee is a company engaged in the business of trading in industrial minerals and caters to the oil well drilling companies, steel plants, pigment industries, alumina industries located in middle east China, Africa, Japan and Southeast Asian countries. The assessee filed a return of income for AY 2021-22 on 24.02.2022 admitting loss of Rs. 10,19,28,887/-. The case was selected for scrutiny and the statutory notices were duly served on the assessee. Since the assessee had international transactions, the A.O made a reference to the Transfer Pricing Officer (TPO) to complete the Arm's Length Price (ALP) of the international transactions. The TPO made an upward adjustment of Rs. 6,69,13,169/- towards export of barite segment. The A.O passed the draft assessment order incorporating the TP adjustment and also made a disallowance u/s. 14A of the Act. Aggrieved, the assessee raised its objections before the Disputes Resolution Pane....
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....r accepted by TPO Reasons for rejection, if any 1. Ashok Alco-Chem Limited (segmental) No Failed in PBIT filter (persistent loss making companies) 2. Ashwa Minerals Private Limited No Failed in PBIT filter (persistent loss making companies).Failed in sales filter (Sales less than INR 1 crore Further, we find that the DRP upheld the filters applied and the comparable chosen by the TPO. In respect of the rejected comparable of M/s.Ashok Alco-Chem Limited and M/s.Ashwa Minerals Private Limited, we find from the following table that the comparable companies have earned profit in 1 year out of 3 years prior to the impugned assessment year 2020-21. M/s.Ashok Alco-Chem Limited Particulars FY 2019-20 FY 2018-19 FY 2017-18 Net profit (as per financial statements) -7,60,89,000 (page no.460 of paper book) -2,81,10,000 (page no. 500 of paper book) 5,29,44,000 (page no.544 of paper book) M/s.Ashwa Minerals Private Limited Particulars FY 2018-19 FY 2017-18 Net Profit (as per financial statements) 5,45,930/- (page no.591 of paper book -64,83,556/- (page no.597 of the paper book). Turnover(as per ....
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....hree years. Accordingly, respectfully following above decision, we direct the TPO to include M/s. Ashok Alcochem Ltd. to the list of comparables. Exclusion of H D Micrones Ltd., Shivom Minerals Ltd., Gimpex Pvt. Ltd. and Naga Ltd.: 6. The TPO has included the above comparables stating that they are involved in trading of different minerals and that TNMM requires only broad comparability and functional similarity. In this regard, the Ld. AR submitted that these comparables are mainly involved in manufacturing and the assessee being a pure trader cannot be compared. The Ld. AR further drew our attention to the annual report of these companies to submit that the companies are engaged in manufacturing activities and there is no segmental information available even where the trading activity is also a part of the business. Accordingly, the ld. AR submitted that all the four above comparables are functionally dissimilar and cannot be part of the list of comparables. 7. We have heard the parties, and perused the material available on record. We notice the following from annual report of the comparables submitted by the assessee: HD Micrones Ltd. 7.1. The company is engaged ....