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2017 (2) TMI 1204 - AT - Income TaxTPA - selection of comparable - Held that:- Companies need to be excluded from the final set of comparables on the ground that there was a significant difference in business strategies like outsourcing of the entire service segment, etc. At the time of hearing, it was stated by the Ld. Representative for the assessee that if Accentia Technologies Ltd., Cosmos Global Limited and Infosys BPO Ltd. are excluded and R Systems International Limited( BPO-Seg) is included in the final set of comparables, then the margin of the comparables shall be within +/- 5% range of the assessee’s margin reflecting that the transactions of the assessee of providing IT enabled services to the associated enterprise are at an arm’s length price and does not require any further adjustment. Since assessee has succeeded on the aforesaid plea, we find no reason to adjudicate other pleas on this aspect, which are kept open. Accordingly, the Assessing Officer/Transfer Pricing Officer is directed to re-determine the arm’s length price of the assessee in the above light. Transfer pricing adjustment in respect of subscription and redemption of Preference Share capital - Held that:- Tribunal in assessee’s own case for assessment year 2009-10, wherein it has been held that the Transfer Pricing Officer cannot disregard the apparent transaction and substitute it with a transaction as per his own perception. Transfer pricing adjustment made in respect of the arm's length fee for the Corporate Guarantee extended by the assessee on behalf of its associated enterprises - Held that:- We direct the Assessing Officer/Transfer Pricing Officer that the guarantee fee be benchmarked by adopting the rate at 1% of the outstanding guaranteed amount for maintaining consistency with the precedent in the assessee’s own case. Denying carry forward and set-off of unabsorbed depreciation and business loss - Held that:- We deem it fit and proper to restore the matter back to the file of Assessing Officer, who shall appropriately consider the claim of carry forward and set-off of unabsorbed depreciation and business loss in accordance with law, ofcourse after allowing the assessee a reasonable opportunity of being heard and putting forth its position on the subject. Thus, on this aspect, assessee succeeds for statistical purposes. Disallowing the current year’s loss and making addition on account of exchange gain on account of redemption of preference shares is directed to be deleted. Disallowance of interest expenditure invoking provisions of section 40(a)(ia) - Held that:- Hon'ble Bombay High Court in the case of Reliance Utilities and Power Ltd.(2009 (1) TMI 4 - BOMBAY HIGH COURT ), the presumption is that the advances to the subsidiaries/sister concerns are out of such owned non-interest bearing funds. On this count itself, we find that the disallowance of ₹ 5,37,76,428/- made by the Assessing Officer is liable to be deleted. Apart from the aforesaid plea, assessee had also pointed out at the time of hearing that the borrowings raised during the year from various banks and other financial institutions were acquired for specific utilization like acquisition of fixed assets, capital expenditure, etc. and, therefore, the same would not be presumed to have been lent to subsidiaries /sister concerns. Be that as it may, having regard to the fact-situation and the ratio of the judgment of the Hon'ble Bombay High Court in the case of Reliance Utilities and Power Ltd.(supra), we uphold the plea of the assessee for deletion of interest expenditure
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