Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2019 (4) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (4) TMI 1757 - AT - Income TaxTP Adjustment - determination of Arm’s Length Price (ALP) in respect of an international transaction of rendering Software Development services (SWD services) by the Assessee to it’s Associated Enterprise (AE) - AO applied lower turnover filter of ₹ 1 Crore and rejected companies with turnover of less than ₹ 1 crore from the list of comparable companies - HELD THAT:- We find that various aspects of application of turnover filter, was considered by this Tribunal in the case of Autodesk India Pvt.Ltd. [2018 (7) TMI 1862 - ITAT BANGALORE] and it was held that turnover is a relevant criteria for deciding comparability of companies and that a company with huge turnover cannot be compared with a company with small turnover. The turnover criteria was based on classification of companies with turnover upto ₹ 200 Crores falling within one category and companies with turnover of ₹ 200 crores to ₹ 500 crores falling in another category and so on It would be appropriate while choosing comparable companies to exclude companies by application of turnover filter. We also observe that the TPO has himself applied lower turnover filter of excluding companies with turnover of less than ₹ 1 Crore and in such circumstances, there is no reason as to why he should not apply the higher turnover limit. This tribunal in Assessee’s own case for AY 2013-14 has upheld similar contention. For the reasons given above, we uphold the order of the CIT(A). Direct the AO to re-compute ALP by excluding above six companies from the list of comparable companies by applying the turnover filter. Assessee, at the time of hearing submitted that, if turnover filter is applied to exclude high turnover companies, then PLI determined by the TPO is within + 3% range, therefore, other grounds of appeals becomes academic in nature, and does not require specific adjudication.
|