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TMI Blog2022 (5) TMI 503X X X X Extracts X X X X X X X X Extracts X X X X ..... (DRP in short) u/s.144C(5) of the Act dated 12/09/2018 respectively for the A.Y.2014-15. 2. The only effective issue to be decided in this appeal of the assessee is with regard to transfer pricing adjustment made in respect of international transaction on purchase of traded goods. During the course of hearing, the ld. AR laid more emphasis on adjudication of ground No.1.5 seeking for adoption of correct gross profit margin of the comparable company ADS Diagnostics Ltd., According to the ld. AR, the ld. TPO while giving effect to the directions of the ld. DRP did not follow the directions and proceeded to adopt the wrong margins of this comparable company ADS Diagnostics Ltd., Hence, we deem it fit to address the ground of inclusion of comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... activity as a whole, the assessee has selected Resale Price Method (RPM) as the 'Most Appropriate Method' (MAM) to benchmark the transactions. For its assembly activity, the assessee has selected TNMM as the MAM and for purchase of capital goods, the assessee had selected 'Other Method' to benchmark the transactions. 2.3 The assessee benchmarked the international transactions in respect of its trading activity using the Resale Price Method. The Profit Level Indicator (PLI) used was Gross Profit/Operating Income. The gross profit margin of the assessee from its trading activity was determined at 22.45%, and the three-year average GP margin of the comparable companies was taken as 11.61% and accordingly, the said internationa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssued a show-cause to the assessee dated 09/10/2017 in this regard and contended that there are qualitative differences in the sales efforts required in the sale of the products dealt with by the comparable companies selected by the assessee in its TPSR vis-a-vis the medical devices which the assessee deals in. The nature of the products in which the assessee deals are highly scientific and technical and persons involved in marketing and sales thereof would be required to have deeper and factual knowledge of technical aspects vis-a-vis that of the comparable companies selected by the assessee. Hence, most of the comparables of the assessee cannot be accepted for comparability analysis. The Ld. TPO also relied upon the OECD Guidelines of 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd no TP adjustment would be warranted. This additional ground was duly admitted by the Ld. DRP and the Ld. DRP also sought for remand report from the Ld. TPO. The Ld. DRP after considering the remand report and rejoinder filed to the said remand report observed in para 5.9 at page 35 of its directions dated 12/09/2018, that the claim of the assessee has force and the Ld. TPO was directed to properly compute the gross profit margin of this comparable company ADS Diagnostics Ltd., The Ld. TPO however, while giving effect to the directions of the Ld. DRP did not adhere to the said directions though the said directions are binding on the Ld. TPO as per the provisions of the Act. Hence, the assessee is aggrieved before us. 2.5. It would be rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nostics Ltd., The said closing stock of inventories had been valued at the lower of cost or net realisable value which is in consonance with the Accounting Standard - 2 (AS-2) on 'Valuation of Inventories' issued by the Institute of Chartered Accountants of India (ICAI). Hence, the valuation adopted by the said comparable company is in accordance with generally accepted accounting principles and in consonance with accounting standards issued by ICAI which are mandatorily to be followed by every corporate in India. In view of the same, we find considerable force in the argument advanced by the Ld. AR that closing stock of inventories figure of ADS Diagnostics Ltd., should be considered only at Rs.2,24,02,515/- as against Rs.3,00,11,802/- tak ..... X X X X Extracts X X X X X X X X Extracts X X X X
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