TMI Blog2013 (12) TMI 414X X X X Extracts X X X X X X X X Extracts X X X X ..... hich impact the financial result of comparable companies should be taken into account and reasonable accurate adjustment should be made for the same - Companies whose employee or directors are involved in fraud should not be accepted as the financial results are not reliable – The issue was set aside for fresh adjudication. Deduction u/s 10A - Held that:- Following CIT vs Gem Plus Jewellery [2010 (6) TMI 65 - BOMBAY HIGH COURT] - Explanation 2 to 10A excludes from the export turnover freight, telecommunication charges, insurance attributable to delivery of articles or computer software outside India - The telecommunication charges and circuit charges of Rs.20,18,437/- should be excluded from both the export turnover and the total turnov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... OP/TC) for the comparables at 15.99%. As the assessee's margin of OP/TC was 19.99% the assessee submitted that there is no necessity for making any adjustment. However, the TPO selected 27 companies as comparable companies and decided on the mark-up to 30.21%. The TPO further added 0.94% towards working capital adjustment and arrived @ 31.15%. Consequently the TPO recommended the adjustment to Rs.1,97,35,890/-. 6. The AO passed draft assessment order based on the adjustment recommended by the TPO. Aggrieved the assessee filed an application before the Dispute Resolution Panel agitating the various comparables as well as the filters adopted by the TPO. 7. The DRP after considering various objections of the assessee determined the mean of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and BPO segment they cannot be taken as comparable to the assessee. In view of the huge turnover also they cannot be compared with the assessee whose turnover is very small. The Co-ordinate Bench in the case of Capital IQ Information systems (India) Pvt Ltd vs. DCIT ITA 1961/H/2011 in para 20 21 have directed exclusion of companies whose turnover is more than Rs.200 crores. Following the same we hold that Infosis BPO and Wipro Ltd (Seg) have to be excluded from the list of comparable companies. For the same reason HCL Comnet Systems Services Ltd (Seg) should also be excluded from the line of comparables while computing ALP. 10. The assessee also objects the inclusion of Maple E- solutions Ltd and Triton Corporation Ltd since the Dir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rofit may have to be examined further to determine the reason for the extra ordinary profits. e) Companies whose employee or directors are involved in fraud should not be accepted as the financial results are not reliable. f) Companies having the turnover of less than Rs. one crore or more than Rs.200 crores should not be taken as comparables. 12. In view of the above we set aside the orders of DRP as well as the assessment order passed u/s.143(3) and 144C and restore the matter to the files of TPO who shall determine the ALP afresh in the light of our observations and directions herein above. 13. The next issue is regarding computation of deduction u/s.10A. The AO excluded communication and circuit charges of Rs.20,18,437, telephon ..... X X X X Extracts X X X X X X X X Extracts X X X X
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