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2014 (12) TMI 1064 - AT - Income TaxTPA - Erroneous computation of operating margin of Caliber Point Business Solutions Ltd. ("Caliber") in the final set of comparable - IT enabled services/business process outsourcing services provided to group companies –Held that:- Assessee contended that the TPO while computing the operating margin of Caliber Point Business Solutions Ltd., has not reduced/apportioned unallocated cost of ₹ 3,96,39,162/- for which the margin of the comparable has gone up to 18.55% as compared to the correct working of 8.70% - revenue has no objection for the same – thus, the matter is remitted back to the AO for determination of working of margin of comparable – Decided in favour of assessee. Selection of outliers companies as comparable – Accentia Technologies Ltd. - Held that:- Following the decision in Capital IQ Information Systems (India) (P.) Ltd. Versus Deputy Commissioner of Income-tax (International Taxation) [2014 (3) TMI 626 - ITAT HYDERABAD] - certain extraordinary events took place in the case of Accentia Technologies Ltd. for which it warrants exclusion of this company as a comparable - extra-ordinary event like merger and de-merger will have an effect on the profitability of the company in the financial year in which such event takes place - It is clear that during the previous year there were extra ordinary events that took place in the company which warrants exclusion of the company and this company cannot be considered as a comparable. Coral Hubs Ltd. (Formerly known as Vishal Informatics Technologies Ltd. – Held that:- In Symphony Marketing Solutions India (P.) Ltd. Versus Income-tax Officer [2014 (2) TMI 83 - ITAT BANGALORE] it has been held that Coral Hubs Ltd. cannot be considered as a comparable - assessee has objected for this company being taken as comparable mainly on the ground that the activities of the company is not only functionally different, but the business model of the company is also different as it sub-contracts majority of its ITES works to third party vendors and has also made significant payments to those vendors - The payments made to vendors towards the data entry charges also supports the fact that the company outsources its works – ‘Coral Hub’ is not a suitable comparable to the taxpayer and hence needs to be dropped from the final list of comparables - assessee is not engaged in e-publishing business, therefore, Coral Hubs Ltd. cannot be considered as comparable – Decided in favour of assessee.
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