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2015 (6) TMI 899 - AT - Income TaxTransfer pricing adjustment - Information Technology enabled services (ITES) segment - selection of comparable - Held that:- Cosmic Global Ltd. be excluded from the list of comparables for the reason of its major activity, namely, Translation, with revenue of ₹ 6.99 crore (out of total revenue of ₹ 7.35 crore), being dissimilar with the assessee’s activities under this segment. The second reason for considering this company as incomparable on entity level is the business model adopted by it. It can be seen that this company has outsourced major activities in comparison with the assessee doing its business inhouse. It goes without saying that these two business models, namely, outsourcing services and providing in-house services, cannot be compared with each other because of their inherent differences. Accentia Technologies Ltd. directed to be excluded from the final list of comparables as a company cannot be considered as comparable because of exceptional financial results due to mergers/demergers. It can be noticed from page 31 of the Annual report that during the year under consideration this company completed the acquisition of 96% of M/s Oak Technologies Inc., a healthcare back-office processing company engaged in medical billing, coding and transcription activities and having substantial global work force. Microland Ltd. company was not originally selected by the assessee as comparable in its TP study. No contention was raised before the TPO for considering it as comparable. It was only for the first time that the assessee came up with the argument for the inclusion of Microland Ltd., in the list of comparables before the Dispute Resolution Panel (DRP). Since the authorities below have not pondered over the comparability of this company, we are of the considered opinion that the ends of justice would meet adequately if the impugned order on this score is set aside and the matter is restored to the file of AO/TPO for examining the comparability of this company. - Decided in favour of assessee for statistical purposes.
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