|Delhi High Court admitted the appeal on the issue of inclusion or exclusion of one comparable which in view of the Court constituted a ‘substantial question of law’ and remanded back the matter to the Transfer Pricing Officer with specific directions in favour of client. Delhi High Court held that the Tribunal had erred in not taking into account evidence placed by assessee on record.|
The fundamental issue was whether manufacturing and trading constituted same or separate business. Keeping in view arguments based on facts and judicial precedents, Tribunal ruled that manufacturing was merely an extension of trading business as there was unity in command and control, single set of audited financial statements, common product and customer for the trading and manufacturing activity. Hence, all expenses incurred in setting up of manufacturing unit were to be allowed even if there were no sales from manufacturing activity and different business segments had been drawn up for Transfer Pricing Benchmarking.