INCOME TAX ACT, 1961

Section 92C

Transfer pricing - Determination of ALP - Selection of comparables - Segmental results v. margins at entity level

Assessee engaged in manufacturing and supply of metro-coaches and bogies and other rail transportation systems in Passenger ('PGR') and Bogies ('BOG') division. entered into transactions with its AE abroad. TPO considered Texmaco Rail and Engineering Limited, as comparable to assessee's case on the ground that Texmaco was dealing in wagons, whereas assessee was dealing in Metro train coaches and bogies and demerger of heavy engineering and steel foundry business had resulted in substantially abnormal increase in total income of Texmaco .Held: TPO had duly considered assessee's claim of extraordinary event and had noted that Texmaco Rail and Engineering Ltd. had been a steady performer and demerger had not caused any radical difference to performance of the company has been a steady performer and that the demerger had not caused any radical difference to the performance of the company. Undisputedly, Texmaco Rail and Engineering Ltd. stood accepted as comparable in the immediately preceding year, however, in earlier year, only segmental results pertaining to heavy engineering segment were included, whereas margins at entity level had been taken during the year under consideration. TPO was accordingly directed to include segmental results of heavy engineering segment only and also to give adequate adjustment in respect of free of cost supplies.

Held:

REFERRED :

FAVOUR : Partly in assessee's favour.

A.Y. : 2011-12

INCOME TAX ACT, 1961

Section 92C

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