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2017 (8) TMI 1560 - AT - Income TaxTP Adjustment - ITES segment of its operations - Comparable selection - HELD THAT:- Acropetal Technologies Ltd., (‘Acropetal’) respectfully following the aforesaid decision of the co-ordinate bench of this Tribunal in the case of Swiss Re Shared Services (India) (P.) Ltd. [2016 (7) TMI 1359 - ITAT BANGALORE] we hold that the engineering design services segment of Acropetal Technologies Ltd., is functionally different and hence cannot be considered as a good comparable to the assessee in the case on hand who is providing only ITES services to its AE’s. The AO/TPO are, therefore, directed to exclude this company from the list of comparables in the case on hand. CRA online Ltd., (See) (‘ICRA’) - We find that the co-ordinate bench of this Tribunal in the case of Swiss Re Shared Services (P.) Ltd. (supra), on which the assessee itself has placed reliance for exclusion of other comparable companies; has examined the comparability of this company and has held it to be a good comparable to companies rendering ITES. Jeevan Scientific Technology Ltd., (Seg) - (‘Jeevan’) - Respectfully following the aforesaid decision of the coordinate bench in the case of Swiss Re Shared Services (India) (P.) Ltd. (supra), we restore the issue of examination of the comparability of this company, ‘Jeevan’ to the file of the TPO for fresh consideration with a direction that if the earnings of this company from BPO operations is less than ₹ 1 crore, then this company shall be excluded from the list of comparable. We hold and direct accordingly. Infosys BPO Ltd., (‘Infosys’) - When the assessee found ‘Infosys’ to be functionally comparable at the time of its TP study, it is not clear to us as to what has now changed for the assessee to now claim that this company ‘Infosys’ to be functionally not comparable. Further, on a perusal of the record we find that the assessee had neither raised this issue of functional non-comparability before the TPO or specifically in the objections raised in Form No. 35 before the DRP. Therefore, it appears that this issue has been raised for the first time before us. While it is an accepted principle that the assessee can raise objection to the inclusion of a company as a comparable before appellate authorities even though it was selected as a comparable in its own TP study, it is also an accepted principle that if the issue of non-comparability of a company is raised for the first time, then it is only in the fitness of things that the TPO shall also be afforded adequate opportunity to examine this issue. We set aside the matter of examination of the functional comparability of this company with the assessee to the file of the TPO for consideration and adjudication after affording the assessee adequate opportunity of being heard in the matter and to make submissions/file details required in this regard. iGate Global Solutions Ltd., (‘iGate’) - HELD THAT:- Annual Report of the company, ‘iGate’ that its operations/revenue relate to the providing of software development services, contract centre Services and ITES. In this factual matrix of the case, we deem it proper to remand the issue of comparability of this company, ‘iGate’ with the assessee in the case on hand to the file of the TPO for fresh consideration by examining the specific services rendered by this company. The TPO is accordingly directed. Working Capital Adjustment - HELD THAT:- Following the decision of the co-ordinate bench of this Tribunal in the case of Moog Controls (India) (P.) Ltd. [2015 (11) TMI 1719 - ITAT BANGALORE] we direct the TPO / AO to allow the actual adjustment towards the differences in working capital position between the assessee and the companies in the final set of comparables. TDS u/s 194C - transactions to be in the nature of ‘contract for work’ - HELD THAT:- Respectfully following the decision of the coordinate bench of this Tribunal in the assessee’s own case for asst. year 2009-10 (supra), we set aside this issue to the file of the AO to verify the assessee’s claim and if it is established that ‘TPL’ has included the receipts from the assessee in respect of these transactions, reflected the same in its books of account and offered the receipts for taxation in its return of income for asst. year 2011-12 and paid taxes thereon; to that extent the disallowance u/s. 40(a)(ia) of the Act is to be deleted. Expenses towards promotional samples free of cost - HELD THAT:- What emerges is that free samples to Doctors can be allowed as business expenditure, but such allowance is attendant upon the examination of the facts of the cases. While it has been held that the MCI Regulations apply to Doctors and not companies like the assessee in the case on hand, that does not absolve the assessee the onus of establishing the genuineness and correctness of the claim made. This aspect has not been examined by the AO/DRP. In this view of the matter, we deem it appropriate to remand this issue back to the file of the AO to examine the assessee’s claim in the light of the judicial pronouncements relied upon by the DRP, our observations and also considering other judicial pronouncements on this issue. Consequently, ground No.2 of Revenue’s appeal is allowed for statistical purposes.
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