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2016 (2) TMI 1050 - AT - Income TaxTransfer pricing adjustment - selection of comparable - Held that:- Assessee had considered itself to be software development services provider and the TPO had also accepted this. The most appropriate method selected both by assessee and TPO were TNM method. This method obviates necessity for complete product identity or services identity between the tested party and the comparables. Broad functional similarities would suffice. However, where the functional profile show that the dissimilarity, even within the very same segment was so significant so as to erode the comparability, then there is a good case for exclusion. Assessee has mainly relied on the decision of the Co-ordinate Bench in the case of M/s Cisco Systems (Ind.) Pvt.Ltd (2014 (11) TMI 849 - ITAT BANGALORE ). The said company was also engaged in the business of rendering software development services. Nothing has been brought before us by the revenue to show that the functional profile of M/s Cisco Systems (Ind) Pvt.Ltd(Supra) was so different from that of the assessee so as to erode the comparability of the comparable companies considered in the said case with that of the assessee. In our opinion, assessee is justified in relying on the said decision which was also for the very same assessment year. Hon’ble Delhi High Court in the case of CIT Vs M/s Agnity India Technologies Pvt. Ltd. (2013 (7) TMI 696 - DELHI HIGH COURT ) had affirmed an order of this Tribunal were M/s Infosys Technologies Ltd was directed to be excluded from the list of comparables considering the peculiar features of the said company. Hence, no purpose will be served in remitting the question of comparability of M/s Infosys Tech.Ltd back to the TPO/AO. In view of the above discussion, we direct exclusion of M/s Bodhtree Consulting Ltd., M/s Tata Elxsi Ltd.(Seg.) and M/s Infosys Tech.Ltd from the list of comparables. Working capital adjustment - Held that:- AO cannot force an artificial limitation to the actual working capital adjustment ratio derived from the comparable companies considered for the arm’s length study. The restriction of working capital adjustment based on PLR of SBI will be appropriate since it is based on a presumption with all lending or credit are having uniform interest rates as decided by the SBI. We therefore, direct the AO to give working capital adjustment considering the comparable companies after exclusion of the three companies mentioned above
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