Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2009 (11) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2009 (11) TMI 918 - ITAT DELHITP Adjustment - Comparable selection - unadjusted arithmetic mean of the comparable companies worked out to 9.89%. The assessee's operating margin on total operating cost worked out to 15.97%, which was higher than the average of comparable companies - HELD THAT:- We find ourselves in agreement with the ld. CIT(A) that the AO has rejected the profit margin declared by the assessee in an unjustified manner. He has selected four companies which were rejected by the assessee company. The assessee submitted that these companies were rejected for the selection because they either had insufficient description information, or significant related party transaction or had exceptional year of operation. The reasons were not considered by the AO and he rejected the submission in a summary manner. Assessee's contention that selection of these companies by the AO amounts to Cherry Picking and hence not justified caries considerable cogency. AO also did not elaborately analyse the results of these companies, but merely stated that at least 3 other companies rejected by the assessee in its document had shown better margin than the assessee company. Hence he made the adjustment of 5%. Now the assessee's submission in this regard is that the average mean of these four companies selected by the AO also was 13.62%. It was lower than the operating margin of the assessee which was 15.97%. This also shows that AO's action did not have any basis. Further, the ld. Counsel of the assessee's submission is that the AO has made an adjustment of 5% in the operating profit margin where-as the existing provision of Act contained in the proviso of section 92C allows a variation of 5%. Therefore, it is amply clear that the AO has arbitrarily made addition which is not in accordance with law. Hence, we do not find any infirmity or illegality in the order of the ld. CIT(A) in this regard. Hence, we hold the same. In the result, the revenue's appeal is dismissed.
|