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2018 (1) TMI 1547 - ITAT MUMBAITP Adjustment - Comparable selection - HELD THAT:- The annual report of the company showed that during the year 2011-12 it was awarded the work of rendering consultancy services for design and engineering, project management procurement of medical equipments, drugs and pharmaceuticals for various prestigious and big projects, that it was participating exhibitions organised by various agencies. HSCC had shown abnormally high profit margin for the year ended on 31/03/2012 @ 39. 08%, that in the earlier years it had shown profit @17. 02%. A government enterprise cannot be rejected as a valid comparable just because it is a government undertaking. But, the basis of accepting/rejecting it is a valid comparable should be the functionality, especially when TNMM is applied. Cases relied upon by the representatives deal with the issue of comparisons of government undertakings with private business entities. But, they lay down the general principles and hold that FAR is the decisive factor for comparing the valid comparables. We hold that ASL is a valid comparable and HSCC is not a good comparable for benchmarking the IT. s, entered into by the assessee, for the year under consideration. If ASL is considered as a valid comparable, the assessee will fall within the safe zone of (+/ -)5% of the arithmetic mean. So, we hold that there was no justification in making the upward adjustment for the IT. s of the assessee. We decide effective ground of appeal, in favour of the assessee.
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