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2014 (4) TMI 925 - AT - Income TaxTransfer pricing - Determination of ALP - Selection of comparables – Held that:- As far as assessee's six comparables are concerned, 4 comparables selected by Assessee are not comparable either on functional profile or on other parameters as considered by TPO and accepted by Assessee after CIT(A)'s order - There is no dispute with reference to two comparables i.e. Nucleus Net Soft & GIS India, whose operating profit by cost is at 16.87%, which is accepted as comparable by Assessee and TPO - The other company, which is also accepted by Assessee and TPO are Mercury Outsourcing Management Ltd., whose operating profit by cost is at 5.88% - when TPO and Assessee accepted a particular company as functionally comparable and when assessee has not agitated before the CIT(A), it cannot be excluded from list of comparables - CIT(A) may have original jurisdiction coterminous with AO, but, when the issue is not agitated, it cannot be reviewed on selection of comparables - He does not have power of review or revision on order of AO which was with CIT(Admn.) u/s 263/ 264 - thus, the comparable cannot be excluded. Spanco Telesystems & Solutions Ltd. – Held that:- Both TPO and Assessee have agreed that profit margin is reasonable for the year and no specific objection was raised either on the operating profit margin on the related party transactions, which were decided in another case - Assessee has not specifically raised any objection on the comparable before the learned CIT(A), there is no reason to exclude the same from the list of comparables ultimately approved by the TPO - the AO is directed to include this comparable as it was mistakenly excluded by the CIT(A), without any discussion. Wipro BPO Solutions Ltd – Held that:- The exclusion of Wipro BPO Solutions, whose operating profit over the cost is less than the companies accepted as comparables by Assessee, is not proper – the assessee's objections cannot be accepted that exclusion of Wipro BPO Solutions on the basis of the turnover alone - the order of CIT(A) is upheld as far as the issue of profitability vis-à-vis scale of operations/turnover is concerned – the view expressed by the TPO is accepted that it will not have significant effect on the profitability of a company, as far as the BPO sector is concerned – it would be appropriate to include the above company as comparable for the purpose of determining the average PLI in the relevant assessment year – thus, the AO is directed to work out the addition – Decided partly in favour of Assessee.
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