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2015 (7) TMI 214 - AT - Income TaxTransfer pricing adjustment - whether OP/OC margin is 15.01% and not 13.05%.? - Held that:- We admit the above ground of appeal raised by the appellant. Further on consideration of the facts, we direct the Assessing Officer to recompute the OP/OC by adopting the operating profit at ₹ 2,46,79,428/- and operating cost at ₹ 16,43,66,021/-. The additional ground is therefore, allowed for statistical purposes. Computing the net margin by considering foreign exchange gain/loss as non operating item - Held that:- Assessing Officer while computing the margin of the tax payer, has adopted the foreign exchange loss of ₹ 13,01,702/- as part of the operating cost; whereas while computing the margin of the comparables, he has treated foreign exchange gain/loss as non operating item which to our mind, is apparently contradictory and otherwise not in conformity with the aforesaid decision of the Tribunal. In light of the above, we direct the AO/TPO to treat the foreign exchange gain/loss as an operating item. As such, the ground raised by the appellant is allowed. Exclusion of M/s. Info Drive Software Limited as comparable taken by the TPO/TRP - Held that:- employee cost as per the financial statements of M/s. Info Drive Software Ltd. is ₹ 164.05 lacs whereas the total cost is 927.61 lacs (Page 617 of Paper Book). On the said basis, according to the appellant since the employee cost is 17.69% which is less than the filter of 25% applied by the TPO, therefore the same should be excluded. We therefore, direct the AO/TPO to verify the claim of the appellant as to the computation of percentage at 17.69% and if the said computation is correct then the said comparable of M/s. Info Drive Software Ltd. be excluded from the list of comparables. So far as objection raised by the learned DR as well as the DRP that this company has been taken as comparable at the time of filing TP study is not maintainable in light of the recent judgment of the Hon’ble Delhi High Court in the case of Chryscapital Investment Advisors (India) (P) Ltd. vs. DCIT [2015 (4) TMI 949 - DELHI HIGH COURT ] - Decided in favour of assessee for statistical purposes. Assessing Officer passed order under section 154 of the Act determining the adjustment at ₹ 2,13,67,552/- in terms of the directions of the DRP - Held that:- The contention of the appellant is that upper band margin based on the PLI of the appellant at 15.01% is 20.76% and since margin of the comparables is 19.87% is less than 20.76% therefore, no adjustment is warranted. We have allowed both the above claims of the tax payer subject to arithmetical verification by the TPO/AO. Having accepted the above claims, we therefore do not proceed to deal with the remaining grounds as these grounds have become academic in nature. In view of the above, adjustment made by the TPO/AO pursuant to the directions of DRP of ₹ 2,13,67,552/- is deleted subject to the arithmetical verification as directed above. - Decided in favour of assessee.
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