Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2018 (4) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (4) TMI 1688 - AT - Income TaxTransfer pricing addition - selection of comparable - exclusion of Infosys, Visualsoft and Satyam as comparable because the turnover of was more than ₹ 100 crore - HELD THAT:- As relying on Chryscapital Investment Advisors (India) (P.) Ltd. v. Dy. CIT [2015 (4) TMI 949 - DELHI HIGH COURT] no comparable can be excluded merely on ground of high turnover. Simply excluding the comparable because turnover of this company is more than ₹ 100 crore is not a proper reason. The CIT(A) has not set out any other reason in the order for excluding this comparable. Thus, we set aside the order of the CIT(A) to that extent. Accordingly we direct the TPO/AO to include this comparable after verifying all the other filters applied by the TPO/AO. Blue Star - Related Party Transaction (RPT) at 75.61% - But arriving at the said RPT , the CIT(A) has not given any proper calculation. Therefore, this comparable company has to be included. Thus, we set aside the order of the CIT(A) to that extent. Accordingly we direct the TPO/AO to include this comparable after verifying all the other filters applied by the TPO/AO. Encore Software - This was excluded by the TPO on the ground that its revenue are continuously declining and its net worth became negative in subsequent year - This comparable was excluded by the TPO because of its revenue continuously declining and its net worth became negative in subsequent year. The CIT(A) rejected the diminishing revenue filter and included this comparable without assigning any reason thereto. The reliance of the co-ordinate bench order by the Ld. DR supports the contentions of the Ld. DR. This comparable is continuously disclosed declining revenue culminating in negative net worth in subsequent year, whereas, the assessee company is having increasing revenue trend. Thus, this comparable company cannot be compared with the assessee. Thus, revenue succeed in this aspect and we set aside the order of the CIT(A) to that extent. Maars Software - excluded by TPO on account of extraordinary event i.e. merger and acquisition during the relevant financial year - Annual Report in which it is clearly stated that the merger was called off. Thus, there was no extraordinary event i.e. merger and acquisition during the relevant financial year which would have impacted its profitability. The CIT(A) rightly included this comparable. There is no need to interfere with the order of the CIT(A) to this extent. Quintegra - this company has different financial year and also because of high RPT - CIT(A) rejected different financial year ending filter but failed to comment on the RPT percentage - It is pertinent to note that about this comparable there is no comment by the CIT(A) as to what are the criteria on which this comparable is valid. The TPO has excluded this comparable because of different financial year and high RPT. This aspect was not at all considered by the CIT(A). Thus, revenue succeed in this aspect and we set aside the order of the CIT(A) to that extent. Nucleus Netsoft - When average PLI of comparables, consisting of companies having similar or high or low turnover, is considered for benchmarking, effect of different volumes of turnover is automatically ironed out. Therefore, simply excluding the comparable because turnover of this company is more than ₹ 100 crore is not a proper reason. The CIT(A) has not set out any other reason in the order for excluding this comparable. Thus, we set aside the order of the CIT(A) to that extent. Accordingly we direct the TPO/AO to include this comparable after verifying all the other filters applied by the TPO/AO. Vishal Information - As regards the re-computation from the order of the CIT(A) it cannot be made out that how the computation has been done by the CIT(A) and same needs to be verified at the level of TPO/A.O. Therefore, this issue is remanded back to the file of the TPO/A.O for consideration and arriving at the proper calculation after verifying all the documents provided by the assessee. Needless to say, that the assessee be given opportunity of hearing by following principals of natural justice. This ground is partly allowed for statistical purpose. Addition u/s 10A - HELD THAT:- In the assessee's own case for Assessment Year 2004-05, the matter has been sent back to the Assessing Officer by directing the Assessing Officer to decide the same. The issue in the present Assessment Year also is similar and, therefore, we direct the AO to allow deduction u/s 10A to SSC, Gurgaon Unit of the assessee after verifying all the details produced before him by the assessee. The assessee be given hearing by following principles of natural justice. Ground No. 3 is partly allowed for statistical purpose.
|