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2021 (6) TMI 1115 - ITAT PUNETP addition - addition u/s 92CA(3) in respect of Information Technology Enabled Services ("ITes") provided by the Assessee to its Associated Enterprise ("AE') - comparable selection - HELD THAT:- Manipal Digital Systems Private Limited - As per Indian Council for Advertising, the online advertising has to be published on true and honest disclosure basis and therefore, when proper documentation of activities are not physically available, in such scenario, referring the website for information is correct option and the information therein cannot be doubted. These are all multi-national companies and certain amount of honesty has to be attributed to them since all are functioning as per relevant rules and laws. With these observations and respectfully, following the judgment of RAMPGREEN SOLUTIONS PVT LTD VERSUS COMMISSIONER OF INCOME TAX [2015 (8) TMI 931 - DELHI HIGH COURT] we direct the AO/TPO to exclude this company i.e. Manipal Digital Systems Private Limited from the final set of comparables with that of the assessee company. CES limited - Segregation of ITes services has to be categorically conducted before classifying as functionally comparable with another. In this case Revenue Authorities have only looked into the revenue earning from ITes segment and included this company as comparable. The facts remains both these companies are functionally different. We therefore, direct the AO/TPO to exclude CES Limited from the final set of comparables with that of the assessee company. MPS Limited - Having gone through the annual report of the company, findings of the Sub-ordinate Authorities and the submissions of the assessee placed on record along with judicial pronouncements, it is evident that MPS Limited is functionally different from that of the assessee company in more-so that high end activities of MPS Ltd. is akin to IT services and not ITes - we direct the AO/TPO to exclude MPS Limited from final list of comparable companies. Domex E-Data Pvt. Ltd. - If two companies performing ITes are to be considered as comparable then the specific business of the said two companies has to be analyzed and then decide upon whether they are at all comparable or not. In this case, we do not find such exercise was conducted neither by TPO nor by the Ld. DRP. Therefore, we are of the considered view that in the given set of facts, this company is functionally not comparable with that of the assessee company. We, therefore, direct the AO/TPO to exclude this company i.e. Domex E-Data Pvt. Ltd. from the final set of comparables. e4e Healthcare Business Services Pvt. Ltd - As decided in M/S MERCER CONSULTING (INDIA) PVT. LTD. GURGAON [2016 (8) TMI 1163 - PUNJAB AND HARYANA HIGH COURT] miniscule difference cannot result in the rejection of the case if it is otherwise comparable. However, it had not laid down any specific percentage as to the deviation permissible. We find, the Ld. DRP stated the permissible deviation is at 0.5% but this is not appearing anywhere in the said judgment. That further, the Sub-ordinate Authorities have rejected this company as it failed on the RPT filter which according to the assessee was not correct. Now before us, the Ld. Counsel for the assessee has prayed that the issue may be restored to the file of AO/TPO for factual verification of functional Compatibility to which the Ld. DR also has not objected. Therefore, in the interest of justice, we set aside the order of the Ld. DRP on this issue i.e. e4e Healthcare Business Services Pvt. Ltd. and remand this matter back to the file of AO/TPO for verification of functional compatibility of this company with that of the assessee while complying with the principles of natural justice.
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