INCOME TAX ACT, 1961

Section 92C

Transfer pricing - Determination of ALP - Selection of comparables - Functional dissimilarity

Assessee-company trading in high-end medical equipment entered into transaction with its AE abroad. TPO considered M/s. South India Surgical Co. Ltd. (SISCO) as comparable to assessee's case. Held: As evident from annual report of SISCO, inventory of SISCO was classified into raw materials and finished goods. It indicated that SISCO was engaged in the activity of converting raw materials into finished goods, i.e. manufacturing. Further, expenses incurred by it, which were in the nature of direct manufacturing expenses, thus, it was difficult to say that manufacturing activity of SISCO was insignificant and was only incidential to its trading activity. Accordingly, SISCO could not be considered as functionally comparable with that of assessee engaged only in trading activity.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2002-03

INCOME TAX ACT, 1961

Section 36(1)(vii)

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