Negative Margins & Functional Differences: ITAT Upholds Comparable Exclusion

Leitwind Shriram Manufacturing Ltd. Vs DCIT (ITAT Chennai)

The Income Tax Appellate Tribunal (ITAT) Chennai has upheld the Transfer Pricing Officer’s (TPO) decision to exclude RRB Energy Ltd. as a comparable company in the transfer pricing case involving Leitwind Shriram Manufacturing Ltd. The tribunal found that RRB Energy had negative margins and functional differences, making it unsuitable for comparison under the transactional net margin method (TNMM).

The case pertained to the assessment year 2012-13, where the TPO made a downward adjustment of ₹2.01 crore to the as

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