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2014 (11) TMI 1017 - ITAT CHENNAITransfer pricing adjustment - selection of comparables - Held that:- OECD guidelines [para 2.62] relied upon by the ‘TPO’ support action of the lower authorities in identifying the said comparables. The assessee fails to rebut this comparability of the aforesaid three remaining entities in ‘ITES/BPO’ domain. The facts now zero-in to six comparables in fray. The assessee had initially itself selected 13 comparables and only three of them ( M/s Accentia Technologies, M/s Coral Hub Ltd. and M/s Cosmic Global Ltd.) could clear the final hurdle. The ‘TPO’ has also not done a better exercise by taking a ‘BPO’ in the field of accounting and related services specifically but ventured in Healthcare, customer Life Cycle Management and e-commerce business comparable(supra) etc. having extraordinary profit margins(supra.) Only the fourth entity M/s Cosmic Global appears to have been involved in desktop publishing. But this comparable is not engaged in ‘BPO’ services. In other words, the Revenue’s three comparables are not in both desktop publishing and captive ‘BPO’ fields but in either one of these two. Therefore, both parties seem to have failed in finding sufficient number of most appropriate comparables. We also notice that the assessee’s comparables have a mean ‘PLI’ of almost 19%. The Revenue’s three comparables(supra) show the same at 33.11%. It has come on record that profit margin in this field varies from 1.8% to almost 50% i.e from a miniscule percentile to extraordinary profits. The latter margins are in the Healthcare Receivables and/Medical transcription etc. We reiterate that neither of the assessee’s vocations i.e desktop publishing and a ‘captive’ BPO involves such a profit margin. All these facts make it clear that the present case does not involve interpretation of a serious question of law or fact. The dispute is only regarding selection of most appropriate comparables. In these peculiar circumstances and also in view of the fact that both parties have not been able to find sufficient number of most appropriate comparables, we observe that interest of justice would be met in case the matter is not remanded back for a fresh innings. We reiterate that in transfer pricing proceedings, finding a most suitable or appropriate comparable for bench marking of a related party transaction to ascertain ‘ALP’ is a very cumbersome task. So, we deem it proper in the interest of justice that ‘ALP’ is determined somewhere in between the two profit margins adopted i.e 13.47%(assessee) and 24.3% (the Revenue) to that @18%. The Assessing Officer is directed to pass his consequential order. The assessee’s grounds challenging comparability of the above three parties are rejected. However, it gets part relief as the ‘ALP’ stands reduced from 24.3% to 18%. - Decided against assessee.
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