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2016 (4) TMI 1178 - AT - Income TaxTPA selection of comarables - Held that:- A comparable company engaged in the similar business which is having the similar FAR may be generally included though same might have been held to be not includible by the courts in some other cases. Further the contractual terms as well as host of other factors stated in above sub rule may determine the comparability analysis. If the difference arising on comparability analysis does not affect the price or profitability of comparable or if so it can be reasonably adjusted same should be taken as good comparable for the Comparability analysis. Therefore it cannot be ever assumed that if a comparable is held to be excludible in one case , it shall always be excluded in the decisions to follow subsequently. Therefore while deciding the comparability the decisions cited definitely would be perused from this angle. Risk adjustment - Held that:- We have carefully considered the rival contentions and fully agree with the contention of the ld. AR that an adjustment should be allowed to the assessee of the difference in the risk borne by the assessee as well as the comparables. Before us assessee has submitted a working which is based on market rate of return of 12.26% used by the TPO while granting working capital adjustment compared with 7.57% rate of return for Indian treasury bills. Based on this working assessee has computed the risk adjustment as under:- Particulars Percentage Market Interest Rate (As per TPO Order PB Pg.286) (A) 12.26% Risk Free interest (B) 7.57% Risk Premium (OA-B) 4.69% Proportion of Risk Premium Rate to Total Market Interest (D=C/A) 38.25% Average PLI of Comparables (as per AO final order) (E) for market return (PB 224) 22.56% Less: Adjustment of Risk Premium out of Market return (F=E*D) (22.56%*38.25%) 8.63% Adjusted Risk free PLI of comparables (G=E-F) 13.93% Tested Party PLI (para 1 5. 1 of TPO order) 10.24%. Without commenting on the correctness of the computation of adjustment requested by assessee we set aside this ground to the file of ld. TPO for fresh consideration in accordance with law after granting proper opportunity to the assessee for supporting its claim. Non including the forex gain or loss of the assessee as operating cost or operating income - Held that:- Forex gain or loss shall be treated as operating income/ expenditure both in the case of tested party as well as comparables and the PLI should be determined accordingly. Regarding the treatment for provision for doubtful debts in para 55 at page 27 of the order coordinate bench has held that this provision be treated as part of operating expenditure. In view of this finding of the coordinate bench for AY 2010-11 in assessee’s own case we direct the ld. TPO to work out PLI of comparables and the assessee on the similar lines following that order. Non-granting of credit for advance tax and TDS - Held that:- Assessee has submitted that the amount of advance tax has not been given credit because of error in quoting PAN no of the assessee and whereas the short credit of TDS is on account of mis-match as per form No.26AS. these facts have also been drawn attention of Assessing Officer vide letter dated 11.03.2015 and 18.11.2015. ld. DR also fairly agreed that credit may be given after verification. In view this we direct the Assessing Officer to grant credit of advance tax as well as TDS to the assessee after obtaining proper undertaking.
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