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2018 (12) TMI 1853 - AT - Income TaxTP Adjustment - comparable selection - Cyber Media Research Ltd; and ICRA Online Ltd. were accepted by the TPO as comparables in the immediately last two preceding years i.e. A.Ys 2009-10 and 2010-11, then on what premise or reason the same had been rejected as comparables for the year under consideration - HELD THAT:- It is not the claim of the TPO/DRP that the functional profile of either of the aforementioned comparables or that of the assessee company had witnessed a change during the year under consideration as against that of the aforementioned preceding years, which would have justified the rejection of the said companies as comparables for the year under consideration. We are of the considered view that in the absence of any change in the circumstances a company which has been accepted as a good comparable by the revenue in the earlier years cannot be whimsically rejected in a subsequent year. In the backdrop of the aforesaid observations and the settled position of law, the whimsical rejection of the aforementioned companies viz (i) Cyber Media Research Ltd; and (ii) ICRA Online Ltd. by the TPO for benchmarking the ALP of the international transactions of the assessee with its AEs during the year under consideration not being justified, thus cannot be sustained and is liable to be vacated. We direct the AO/TPO to re-workout the ALP in the hands of the assessee after including the aforementioned companies i.e. (i) Cyber Media Research Ltd; and (ii) ICRA Online Ltd. as comparables in the final list of comparables. In case, the claim of the assessee that after including the aforementioned companies its ALP would fall within the range of is found to be in order then no adjustment to the ALP would be called for in the hands of the assessee. Unexplained credit - Difference between the “closing stock‟ and “opening stock" -A submitted by the assessee before the DRP that the difference in the valuation of stock had arisen only due to software system while preparing the stock statement as per the format that was required during the course of the assessment proceedings - HELD THAT:- In the course of proceedings before the DRP, it was claim of the assessee that the variance in the valuation of stock was on account of the software system while preparing the statement of stock in the format as was required during the assessment proceedings. However, in sharp contradiction of its earlier stand, it is now submitted before us that the said variance had arisen on account of loss of stock. Be that as it may, in the absence of any plausible explanation as regards the difference of ₹ 3,53,550/- in the valuation of the stock, we find no reason to dislodge the observations of the lower authorities that the assessee had failed to reconcile the variance in the stock. However, we find ourselves to be in agreement with the contention of the Ld. A.R that in case the explanation of the assessee as regards the discrepancy in stock of ₹ 3,53,550/- was not to be accepted, then the addition to the said effect could only have been made by increasing the value of the “closing stock‟ in the hands of the assessee. We thus in terms of our aforesaid observations uphold the addition.
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