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2017 (6) TMI 1280 - AT - Income TaxTPA - Comparable selection criteria - Held that:- Companies functionally dissimilar with that of assessee need to be deselected from final list. A company is said to be not good comparable and should be excluded from the list of comparables only if it is a consistent loss making company. The company is said to have consistent losses, if the company has suffered loss in the last three consecutive assessment years including the assessment year selected for comparison. Where the assessee is providing off-site services it cannot be compared with a company providing services on-site Risk adjustments - Held that:- A perusal of documents furnished by the assessee giving the background of the case reveal that the assessee has admitted that it is a captive service provider with limited functions and negligible risk. Subsequently, the assessee in proceedings before the TPO asked for risk adjustment. The TPO rejected the same. The assessee has also raised objection before the DRP against rejection of risk adjustment, wherein the assessee was unsuccessful in seeking the desired relief. Before Tribunal the ld. AR of the assessee has reiterated the submissions made before the authorities below. The ld. AR of the assessee has not been able to show as to how the findings of authorities below on this issue are bad. We find no merit in the ground raised by the assessee, accordingly, the same is dismissed. Benefit of ± 5% as per the provisions of section 92C(2) - Held that:- The assessee has prayed for granting the benefit of ± 5% as per the provisions of section 92C(2) of the Act. The ld. AR has submitted that if Ancent Software International Limited and Quintegra Solutions Limited are included in the list of comparables; and Acropetal Technologies Ltd. and Thirdware Solutions Limited are excluded from the list of comparables, the average margins of the assessee will fit within ± 5% range. However, before us no working has been furnished by the ld. AR to substantiate his point. Accordingly, we remit this issue back to the file of TPO to consider the contentions of the assessee and decide this issue, in accordance with law. Thus, ground raised by assessee allowed for statistical purpose. TPA - Comparable selection - Held that:- DRP was right in applying turnover filter while selecting comparable companies. After having applied turnover filter, both the companies have been included in the list of comparables. We find merit in the ground raised by the Department. Once, having applied turnover filter there cannot be arbitrary selection of the companies ignoring the turnover. The DRP has drawn our attention to the financial results of both the aforesaid companies. A perusal of profit and loss accounts of the said companies for the financial year ending 31- 03-2010 reveal that both these companies have turnover much more than ₹ 200 crores. Accordingly, both these companies have to be excluded from the list of comparables. Accordingly, ground No. 2 raised by the Department in appeal is allowed. Rejecting “On-site revenue filter‟ applied by the TPO - Held that:- This issue we have already dealt in detail deciding the appeal of the assessee. We have reversed the findings of DRP in rejecting "On-site revenue filter".
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