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2015 (8) TMI 960 - AT - Income TaxTransfer pricing adjustment - addition on account of adjustment made in arm’s length price on the value of international transactions - whether the five comparable companies which has been rejected by the TPO on the ground that they are functionally different from the assessee can be included for comparability analysis for benchmarking the ALP of the assessee company? - Held that:- In the case of ITDC Ltd., it is seen that this company is mainly engaged in the business of running of hotel and restaurants at various tourist places besides providing transport facilities. Its main business activities revolve around promotion of tourism in India.The SEL i.e. sound and light activities carried on by this company are also different. The segmental details and also income from such service goes to show that income from services rendered have been classified into several categories which are entirely different from each other. The contentions raised by the learned Departmental Representative that the functional profile of the company is entirely different from the activities carried on by the assessee appears to be acceptable. Therefore, in our opinion, going by the functional profile as available on record before us, this company has rightly been rejected by the TPO and cannot be included as a comparable entity even at a segmental level for conducting any comparability analysis. Accordingly the assessee’s contention for including the said company is rejected. EDCIL and ICRA Management Consulting Services, we find that these companies were accepted as a comparable by the TPO in the immediately preceding assessment year 2007–08 and there was no dispute among the parties in that year for taking them as a comparable company. Therefore, this company on merits also is includable in the set of companies. In the case of EDCIL, though main activities are functionally different, however, its technical assistance segment can be broadly considered to be functionally similar to the assessee. Since this company has been accepted as a comparable by the Department as well as by the assessee, therefore, following the rule of consistency, we hold that this company should also be included as comparable. We also find merits in the contentions of the Ld. Counsel that in the earlier year once these two companies have been found to be functionally similar, then in this year they cannot be rejected on functional analysis. Thus, both the aforesaid companies i.e. ICRA Management and EDCIL are directed to be included as comparable for the purpose of comparability analysis for determining the ALP of the international transactions of the assessee company. Overseas Manpower Corp. Ltd., it is seen that it is purely recruitment and placement company and its main revenue is from recruitment services only. Thus, not only the functional profile, the other test of comparability analysis also fails in this case. Therefore, we fully agree with the contention of the Ld. CITDR that this company has rightly been rejected by the TPO for the purpose of comparability analysis and is to be excluded. Inhouse Productions Ltd., it is seen that this company is mainly engaged in the business of Knowledge Process Outsourcing (KPO) in the field of healthcare and is also engaged in media. The functions and the business activities of this company as seen from the records is not comparable to that of the business activities carried on by the assessee and the functional profile is also different. Therefore, this company has rightly been rejected by the TPO. Thus, besides four companies, accepted both by the TPO as well as by the assessee, two more companies should also be included namely EDCIL and ICRA Management Services for the purpose of comparability analysis for determining the ALP. The balance three companies are to be excluded. The TPO is directed to work out the arithmetic mean for the finally selected six companies and determine the ALP. - Decided partly in favour of assessee. Failure of the Assessing Officer to grant credit for advance tax - Held that:- We direct the Assessing Officer to give credit of the advance tax paid after verifying it from AS26 or as per the challan. - Decided partly in favour of assessee.
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