1. This appeal under Section 260-A of the Income Tax Act (the Act) filed by the Revenue challenges the order dated 18th January, 2013 passed by the Income Tax Appellate Tribunal (the Tribunal). The impugned order pertains to the Assessment Year 2008-09.
2. The Revenue has urged the following questions of law for our consideration.
“(i) Whether on the facts and in law, the Tribunal was justified in rejecting MIL as a comparable on the ground that the Annual Report of MIL did not provide segmental information without appreciating that under TNMM, broad functional similarity is required to be seen more so as the assessee itself had not furnished audited segmental accounts?
(ii) Whether on the facts and in law, the Tribunal was justified in rejecting M/s. Pidilite Industries Ltd.(PIL) as a comparable on the ground of there being a merger and demerger during the year without appreciating that merger and acquisition is a normal business practice which does not affect FAR analysis and hence not relevant as PIL is a proper comparable being functionally similar to the assessee company?
(iii) Whether on the facts and in law, the Tribunal was justified in directing the AO/TPO to benchmark only the AE transactions without appreciating that (a) the assessee itself in its transfer pricing study report (TPSR) has chosen entity level PLI to benchmark the AE transactions (b) the assessee had itself failed to furnish audited segmental accounts and therefore, the TPO had rightly applied revised PLI at the entity level to determine the ALP?”
3. So far as the question no. (iii) is concerned, Counsel for both parties state that the issue is covered against the Revenue by the decision of this Court in the Commissioner of Income Tax-8 v. Tara Jewels Exports Pvt. Ltd. in Income Tax Appeal No. 1814 of 2013, which was dismissed on 5 October, 2015. In the above view, the issue raised in question (iii) does not give rise to any substantial question of law. Thus, not entertained.
4. The appeal is admitted on question nos. (i) and (ii).
5. Registry is directed to communicate a copy of this order to the Tribunal, this would enable the Tribunal to keep the papers and proceedings relating to the present appeal available, to be produced when sought for by the Court.