Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2012 (6) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2012 (6) TMI 60 - AT - Income TaxTransfer pricing - arm's length price - master software development agreement - Selection of comparable - held that:- When the assessee was mainly engaged in software development services, though in a different vertical, having regard to the overall circumstances of the case, such comparable companies selected by the TPO should be considered as comparables in this case. As regards those four companies referred to by the assessee are concerned, after discussing the factual position in respect of those companies and applying those filters adopted by him, in para 13 at page 93-94 of his order, he has clearly held that the same cannot be considered as comparables in this case. In fact, having regard to the factual findings given by the TPO in that para, his decision in rejecting those four companies as comparables, is justified. Accordingly, we reject the plea of the assessee. Regarding ALP - held that:- Other enterprises have claimed depreciation at much lower amounts. Size of the assets besides the age of the assets of comparables was leading to difference in the profit margins and in mean margin. On the contrary, claim of depreciation is eating up large chunk of profit in the case of the taxpayer. - The CIT(A) has not said a word on "asset" employed and "risks" suffered by the tested party and the comparables. Thus, material differences needing suitable adjustment were ignored and a flawed analysis was carried even in appellate proceedings. Without considering obvious material differences, the contention of the assessee to take profit without depreciation was rejected. This rejection is not sound in law. This ground is allowed.
|