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2014 (11) TMI 9 - AT - Income TaxSelection of comparables – Abnormal profit making concerns – Determination of ALP – International transaction of software services to Associate Enterprises - Held that:- Following the decision in Maersk Global Centres (India) Private Ltd. Vs. ACIT [2014 (3) TMI 891 - ITAT MUMBAI] - concerns which earn abnormally high profit margins cannot be excluded straight away but it would require further investigations to ascertain the reasons for their high profits - assessee is justified in asserting that the margins of 64.48% of the concern considered for the year under consideration is not a normal business trend - the inclusion of the concern in the final set of comparables would not lend credibility to the comparability analysis and therefore, the same deserves to be excluded. The plea of the assessee for exclusion of Bodhtree Consulting Ltd. from the final list of comparables cannot be shut out merely because the said comparable has been adopted by the assessee in its Transfer Pricing Study - it would be imperative for the assessee to justify exclusion of a concern from the list of comparables if in the initial Transfer Pricing Study undertaken by it, such a concern has been adopted as a comparable - the profit margins of the concern are fluctuating widely and are abnormally high for the period under consideration - assessee has justifiably demonstrated that the concern M/s. Bodhtree Consulting Ltd. is liable to be excluded from the final set of comparables, even though the said concern was considered as a comparable initially in its Transfer Pricing Study - the concern, M/s. Bodhtree Consulting Ltd. be excluded from the final list of comparables for carrying out the comparability analysis – thus, the AO is directed to re-work the arm’s length price of international transactions of software services rendered by the assessee to its Associate Enterprise – Decided in favour of assessee.
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