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2015 (7) TMI 561 - AT - Income TaxTransfer pricing adjustment - selection of comparable - Coral Hub Limited - Held that:- In the case of Mercer Consulting (India) Pvt. Ltd. (2014 (7) TMI 715 - ITAT DELHI) also the company was engaged in rendering IT and IT enabled services to its AEs. This company was providing service in the nature of application development, quality assurance, application maintenance, implementation services, helpdesk services, administrative processing, contribution processing, health and benefits processing and pension plan valuation services to the clients of its AEs for and on their behalf for which it is compensated on cost plus basis. Therefore, we do not find any reason to take a different view in the case of present assessee which is also rendering almost similar services. It is well settled law that in TP cases identical replica of the tested party cannot be found and one has to consider the broad similarities between the tested party and the comparables. The business model of assessee is not comparable to coral hub particularly on account of different models adopted by two companies for carrying out its functions. We, accordingly, direct the AO to exclude this comparable. Eclerk Services Ltd. - primarily assessee was engaged in providing primary data for various field of activities but not complete business solutions. Therefore, this company could not be treated as comparable for the purpose of determining ALP of the transactions between the assessee company with its AEs. We, accordingly, direct that this company be excluded from the list of comparables finally taken by the AO/ TPO as per the direction of the DRP. Aditya Birla Minacs Worldwide Limited; and Microgenetic Systems Ltd. - Admittedly the AO while giving effect to the direction of DRP has adopted the PLI of Aditya Birla Minacs Worldwide Limited and of Microgenetic Systems Ltd., on the basis of safe harbor rule and substituted the margin that was calculated by TPO in his order. This could not be done by AO unless there was direction by ld. DRP. The AO could not vary the margins as computed by TPO in his order, because once reference has been made by AO under section 92CA(1), then in view of the provisions of section 92CA(4), the AO is required to compute the total income of the assessee under sub-section (4) of section 92C in conformity with the ALP as determined by the TPO. Therefore, unless DRP has given any specific direction altering the ALP as determined by TPO, the AO does not have power to alter the same. We, accordingly, direct the AO to take the margins in regard to Aditya Birla Minacs Worldwide Limited and Microgenetic Systems Ltd., as determined by TPO.
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