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2016 (8) TMI 1157 - ITAT DELHITPA - ALP - determining the cost base by considering those expenses which could be directly linked with the production and distribution activity of the assessee for its AE - Held that:- The assessee has not objected to the inclusion of the clearing charges foreign exchange fluctuation loss and certain indirect and direct cost of production in the cost base. The assessee has objected to the inclusion of expenses like other repair and maintenance, electricity, insurance and depreciation on the other assets being overhead expenses in the cost base for calculating grass markup over cost. We agree with the submissions made by the Ld. AR that while calculating the cost base over cost as per rule 10 B, expenses directly related to the production and distribution of beads activity must only be considered. It is observed that the other expenses included by the Ld. TPO being electricity, insurance and depreciation etc cannot be considered to be directly related to the production and distribution of the beads activity. We therefore, do not find any infirmity with the findings of the Ld. CIT (A) in determining the cost base by considering those expenses which could be directly linked with the production and distribution activity of the assessee for its AE. Selection of comparable - Held that:- Regarding the submissions advanced by both the parties relating to the inclusion/exclusion of the 2 comparables being Goldiam International Ltd. and Punit Commercials Ltd, is it is observed that the annual report submitted by the assessee, was not available on the database at the time of TP proceedings. The plea advanced by the Ld. AR is that, in the event these companies are included then the correct margin as per the annual accounts must be considered. We accordingly set aside these to the Ld. TPO for verification of the data provided in the annual accounts of these 2 companies and to calculate the gross margin by using the correct figures.
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