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2015 (5) TMI 1095 - AT - Income TaxAddition made on account of determination of arm's length price of assessee’s international transaction - selection of comparable - Held that:- While benchmarking the international transactions of tested party and while applying TNMM method endeavor has been made to select such companies, which are functionally similar. Where the comparables are functionally dissimilar to the tested party, the margins of such companies cannot be utilized for determining the arm's length price of international transactions carried out by the tested party. In the above said facts and circumstances, we find no merit in the selection process carried out by the TPO and we direct the TPO to exclude the margins of Agrima Consultants International Limited while benchmarking the arm's length price of international transactions of the assessee and applying the margins of other comparables as selected by DRP, determine the arm's length price of international transactions of assessee. Another objection raised by the assessee was against the selection of Rolta India Limited, while benchmarking the international transaction with respect to design engineering services provided by the assessee to its AEs. The learned Authorized Representative for the assessee pointed out that the margins of Rolta India Limited could not be applied as it had different year end as against the assessee’s year end 31.03.2008. The said company’s year end was 30.06.2007. It was pointed out by the learned Authorized Representative for the assessee that since the data of comparables concerned does not correspond to the financial year of the year, the same was un-comparable. We find merit in the plea of the assessee as even the provisions of Rule 10B(4) of the Income-tax Rules, 1962 provided that the data to be used in analyzing the comparability of an un-controlled transactions with an international transaction, shall be the data relating to the financial year, in which the international transaction had been entered into. In the present case, the data adopted by Rolta India Limited does not relate to the financial year, in which the international transaction has been carried on by the assessee and hence, the said concern is to be excluded from the list of comparables.
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