Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2015 (10) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2015 (10) TMI 2625 - AT - Income TaxTPA - selection of comparable - Assessee does not outsource the work rather it receives outsourced work - Abnormal profit in the F.Y. of company is a major constraint to be selected as comparable - Held that:- Cepha Imaging Pvt. Ltd. should be considered as a comparable, if the RPT to sales is less than 25%. So far as Allsec Technologies Ltd.- the functions carried out by Allsec Technologies Ltd. are different from that of the functions carried on by the assessee. Further, this company has incurred loss in the current year as well as in the preceding year. Apart from the general argument the Ld. Counsel for the assessee could not rebut the findings/observations given by the AO as well as the DRP as to how Allsec Technologies Ltd. should be included in the list of comparables. The various decisions relied on by Ld. Counsel for the assessee are not applicable to the facts of the present case. We, therefore, reject the arguments of the Ld. Counsel for the asessee on this issue and uphold the action of the AO/DRP in rejecting this company from the list of comparables. R Systems International Ltd. - the company is product development and product seller. Accordingly, the DRP considered the same as not comparable with that of the assessee company. We do not find any infirmity in the order of the AO as well as the DRP on this issue. We find the Ld. Counsel for the assessee while arguing the case for exclusion of Cosmic Global Ltd. has argued that the same company had to be excluded since it had paid translation charges to third parties indicting outsourcing of work. For the above proposition, she also relied on various decisions. Therefore, once it has been found by the DRP from the director’s report that R Systems International Ltd. is leading provider of outsource product development services, business process, outsource service and also own product suites in BFSI, manufacturing and logistics verticals etc., therefore, in the own arguments of the Ld. Counsel for the assessee this company is functionally dissimilar and therefore the same cannot be accepted as comparable. In this view of the matter, we uphold the order of the AO/DRP on this issue. Risk adjustment - Held that:- The different benches of the Tribunal are taking the view that an assessee who is a captive service provider and does not assume any risk or takes lesser risk as compared to comparable company which undertakes higher risks, then it is entitled to some risk adjustment. However, since the assessee has not produced complete analysis and complete spectrum of risk faced by business entity and in absence of risk analysis of each comparable, we restore this issue to the file of the AO with a direction to give an opportunity to the assessee to work out and justify to the satisfaction of the AO regarding the risk adjustment it is entitled to. We hold and direct accordingly. Ground of appeal by the assessee is accordingly allowed for statistical purposes.
|