Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2014 (8) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2014 (8) TMI 871 - AT - Income TaxTransfer pricing adjustment - Selection of comparables – Held that:- Although a detail submission was made on behalf of the assessee before the CIT(A) on the basis of FAR analysis to show that the selection of Ms. Vimta Labs as comparable is not Justified, the CIT(A) has not accepted the stand of the assessee on the issue without giving any cogent or convincing reasons – relying upon M/s Adobe Systems India Private Limited, Versus Additional Commissioner of Income tax [2011 (1) TMI 933 - ITAT NEW DELHI] - exclusion of comparables showing supernormal profits as compared to other comparable is fully justified – the order of the CIT(A) is remitted back to the AO for fresh consideration - the contentions of the assessee is accepted that this company cannot be treated as a comparable - among the ITES companies there is a hierarchy in terms of skill required to provide services - It ranges from providing routine services where no skills are required to providing services where highly professionalized skills are required - Depending on the skills required to perform ITES the comparability has to be done – the company cannot be regarded as a comparable and deserves to be excluded from the list of comparables. Computation of the margin – Rent for unutilized space as part of cost on which profit has to be earned – Held that:- The operating margin of 12.42% on cost as calculated by TPO is not in line with the operating margin of 15.18% as calculated and submitted by the assessee - while calculating operational margin no adjustment for expenses of rent relatable to substantial portion of unused floor space has been carried out - The assessee has adjusted a sum of ₹ 33 lacs towards the unutilized floor space including 10893 square feet acquired in new block for future expansion - TPO/AO is directed to re-workout the TP adjustment as per the provisions after excluding the comparables – Decided partly in favour of Assessee. Addition made u/s 10A – Held that:- Following the decision in CIT v. Gem Plus Jewellery Ltd. [2010 (6) TMI 65 - BOMBAY HIGH COURT] - DRP though accepts such position but has decided the issue against the assessee only to give an opportunity to the department to pursue the same in higher forums - AO is directed to exclude the same from total turnover also – Decided in favour of Assessee.
|