MUNJAL SHOWA LTD,GURUGRAM vs. JCIT, SPECIAL RANGE-6, NEW DELHI

This appeal by the assessee is preferred against the order dated 16.10.2018 framed under section 143(3) r.w.s 144C the Income-tax Act, 1961 [hereinafter referred to as 'The Act'] for Assessment Year 2014-15.

Though the assessee has raised as many as six grounds of appeal, but the only ground argued before us is as under:

Briefly stated, the facts of the case are that the appellant operates as an ancillary and manufactures shock absorbers and struts for leading two wheelers and four wheelers primary products being front, forks, shock absorbers, struts, gas springs and window balancers for sale in domestic market. The appellant has three manufacturing locations, two in Haryana and one in Uttarakhand.

The following international transactions/specified domestic transactions have been entered into by the assessee during the year under consideration:

One of the filters adopted by the assessee in his TP approach in respect of comparables was export sales less than/equal to 10% of sales.

We find that the details of the export sales of total sales in the case of the assessee furnished before the TPO is as under:

It can be seen from the above that out of total sales made by the assessee, 99.96% of the total sales were made to the OEMs in India. In our considered opinion, in order to find comparables commensurate with geographical locations in which the assessee is functioning, application of filter of 10% applied by the assessee is most reasonable. We further find that in the preceding Assessment Year i.e 2013-14, the DRP itself had accepted the filter of export sales less than /equal to 10% of export sales as an appropriate factor for comparability analysis.

Considering the past history of the assessee, we direct the TPO to exclude the comparable companies where export sales are more than 10% of the total sales and decide the issue afresh. With these directions, the appeal is allowed.

In the result, appeal of the assessee in is allowed.