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2016 (8) TMI 1162 - ITAT PUNETPA - ALP - selection of comparable - Held that:- In view of the low employee cost and high related party transactions Coral Hubs Ltd. should be excluded from the comparables. Cross Domain Solutions Ltd. is engaged in high skilled IT services which cannot be compared with the services rendered by the assessee, we direct the TPO to exclude the said company from the list of comparables. E4e Health care Solutions company is engaged in business of providing healthcare outsourcing services for the healthcare industries, the same in our opinion cannot be compared with the assessee which is engaged in providing ITES enabled services Denial of adjustment in respect of extraordinary/non-operating expenses - Held that:- Since the assessee in the instant case has given full details of the various expenses justifying its treatment as non-operating expenditure, therefore, considering the totality of the facts we hold that the assessee was fully justified in adjusting the above expenses for computing its operating margin. Therefore, we set aside the order of the CIT(A) on this issue and direct the AO to compute the operating margin of the assessee company by adjusting the above expenses. Grounds raised by the assessee on this issue are accordingly allowed. Non granting of working capital adjustment in respect of comparable companies selected by the TPO - Held that:- We find the different Benches of the Tribunal are consistently taking the view that adjustment on account of working capital should be provided. Although this ground was raised before the CIT(A) he has not adjudicated the issue. We find the Pune Bench of the Tribunal in the case of Ariston Thermo India Ltd. [2015 (8) TMI 977 - ITAT PUNE ] as held to remit the matter back to the file of the Assessing Officer who shall examine as to whether or not in the present case the working capital requirement constitute an item of difference so as to require adjustment as per the parameters laid down by rule 10B(1)(e)(iii) r.w.rule 10B(3) of the Rules for the purposes of analyzing the comparability of the comparable uncontrolled transactions with the international transactions of the assessee. Thus we restore the issue to the file of the AO with a direction to decide the issue of working capital adjustment in the light of the decision above Include loss making concerns - Held that:- We find no infirmity in CIT-A order directing the AO to include the loss making companies also in the list of comparable companies Once loss making companies are included in the list of comparable companies, then the average net margin of the comparable companies would fall within +/-5% of safe harbour range u/s.92C(2) and the addition made on account of transfer pricing adjustment should be deleted.
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