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2015 (1) TMI 554 - AT - Income TaxTransfer pricing adjustment - determination of Arm’s Length Price - selection of comparable - Held that:- Assessee is entitled to object to certain comparables selected by TPO which were also initially selected as comparables by assessee itself. If actually the RPT of Caliberpoint Business Solutions Ltd. is more than 25%, it cannot be treated as a comparable to assessee. Accordingly, we direct AO/TPO to verify this aspect and if it is found that RPT as a percentage of sales is more than 25%, then, this company cannot be treated as comparable to assessee. For Cosmic Global Ltd. company it cannot be treated as comparable to assessee as it outsources its activities. For Infosys BPO Ltd.it cannot at all be considered as a comparable to assessee not only because of its size but also due its brand value, diversified activities, and other functional dissimilarities. For CG Vak Software cannot be treated as comparable to assessee on ground of functional dissimilarity as it is predominantly a computer software development company. For CEPHA Imaging P. Ltd there is nothing in the annual report to suggest that it is into software development. Further from the annual report as well as working submitted by assessee it appears that the RPT as a percentage of sale is 16.59%. Thus direct AO/TPO to verify this aspect and if it is found that RPT of this company is less than 25%, then, this company cannot be rejected as a comparable. For Celestial Biolabs Ltd. is concerned, we are of the view that this company cannot be treated as comparable to assessee as it is engaged in various activities. As far as TCG Life Science Ltd. is concerned can be seen from facts on record, substantial revenue earned by the company is from R&D activities. Therefore, only because revenue from manufacturing activities exceed the cut off mark by 0.16%, the company cannot be treated as un-comparable to assessee. Thus direct the AO/TPO to compute the ALP of the international transactions under both the segments keeping in view our directions herein above. - Decided partly in favour of assessee for statistical purpose. Allowance of risk/working capital adjustment - Held that:- in the TP study assessee has not worked out any adjustment on account of risk or working capital. However, since we have directed the AO/TPO to compute ALP in accordance with directions given by us on comparables, while doing so, he shall also consider assessee’s claim towards adjustments to be made on account of risk/working capital etc. after allowing opportunity of being heard to assessee. - Decided in favour of assessee for statistical purposes.
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