2011 (4) TMI 856 - ITAT MUMBAI

Arm’s Length Price - Reference to TPO - Transfer pricing adjustment - assessee company is engaged in the business of couriers and picks up and delivers express shipments mainly as an international courier - selection of comparables - Held that:- unable to agree with the first submission of the assessee because in the case of On-Dot Couriers & Cargo Ltd. and Skypak Services Specialists Ltd. the turnover is less than 5% and, therefore, these two comparables are totally non comparables. Even in the case of Over Night Express Ltd. the turnover is less than 20%. It is a universal fact that there are lot of differences between the large businesses and small businesses operating in the same field. In the case of small business economies of scale are not available and, therefore, generally less profitable - merely because these two companies were considered as comparables in A.Y 2005-06 it is not necessary that this year also they should be considered particularly when we do not know the details as to why they were considered as comparables in the previous year - it is clear that the assessee has itself accepted that the bad debts recovered, email facility charges, discount receipts and handling charges would be part of the operating income

As far as the other receipts are concerned, which amounts to Rs.88,82,624/- in the case of DTDC and Rs.47,24,772/- in the case of First Flight Couriers Ltd., these are large amounts, but in the absence of details it is difficult to comment on the nature of these receipts though Ld.DR has made a good point that when small items have been segregated, chances are that these receipts may be related to operational income - Appeal is allowed for statistical purposes