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* The rejection of economic analysis by the Ld. TPO/AO. * The Ld. TPO/AO's action of not considering the impossibility of performance, in the light of non-availability of single year data of comparables for the purpose of TP Documentation and in rejecting the usage of multiple year data by the Assessee.

• The key-word search carried out by LD. TPO/AO by to select 'Valves', 'Industrial Valves' and 'Other Valves'.

For detailed submission on this objection kindly refer Appendix III.

* Objection 3 -- Disallowance u/s 4o(a)(ia): On the facts and circumstances of the case, and in law, the Ld. AO has erred in proposing to disallow the deduction claimed of Rs. 45,99,634 under Section 4o(a)(ia) of the Act. It is prayed that the AO be directed to allow the deduction claimed based on the facts as submitted by the Assessee. For detailed submission on this objection kindly refer Appendix IV.

i. The Ld TPO/AO conducted a fresh search to identify comparables with inappropriate filters, disregarding the search process carried out by the Assessee;

ii. The Ld. TPO/AO disregarded the usage of multiple year data in the TP Documentation of the Assessee without considering the impossibility of performance for usage of single year data;

iii. The Ld. TPO/AO disregarded the PLI adopted by the Assessee in its TP Documentation without considering the characterisation of the Assessee, iv. Without prejudice to the above, the Ld, TPO/AO disregarded the Assessee's observations on the comparables identified by him based on the fresh search conducted.

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the impossibility of impossibility of performance performance because of non availability of single year data i.e. FY 2008-09 for the purpose of TP Documentation.

(Please refer Page Nos.260 to 267 of the Paper Book for the same)

iii. Turnover Filter: The economies of scale impact the profitability of a company by lowering its fixed costs in the long run and that there is no major correlation between turnover and profitability of the comparables. Accordingly, application of turnover filter of Rs, 350 crore does not help in identifying relevant comparables. Hence may not be applied. (Please refer Page Nos. 278 to 280 of the Paper Book for the same);

iv. Comparables having cUmimshing revenues/persistent losses: A company that has diminishing revenues need not necessarily be a consistent loss-maker; While the Ld, TPO/AO has completely disregarded the multiple year data followed by the Assessee in arriving at the operating profit mark-up on total cost of the comparables, the Ld. TPO /AO has still observed the track record of the comparable for over the period of 3 years for applying the said filter, which is incorrect. Hence, adoption of this filter is incorrect (Please refer Page Nos. 282 to 282 of the Paper Book for the same) v.Adoption of PLI: The Ld. TPO/AO has considered OP'/TC as an appropriate PLI without considering the characterisation of the Assessee being Licensed Manufacturer while arriving at the adjustment. Since PLI denotes measurement of the profits earned by any entity in view of its functional profile, the Assessee requests Ld. TPO/AO to consider OP/Sales as appropriate PLI. (Please refer Page No. 157 and Page No. 271 to 271 of the Paper Book for the same) vi. Adoption of Single year data for the search ; The action of Ld. TPO/AO has disregarded the impossibility of performance because of non availability of single year data i.e. FY 2008-09 for the purpose of TP Documentation and adopted a single year search.