Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2019 (1) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (1) TMI 1866 - AT - Income TaxTP Adjustment - comparability - Considering R Systems International Ltd. as comparable - HELD THAT:- As rightly pointed out by the ld. AR, Rule 10(B)(4) does not exclude from consideration the data of an entity merely because its financial year is different from the financial year of the assessee. What the Rule requires is that the data to be used in analyzing the financial results of an uncontrolled transaction with an international transaction shall be the data relating to the financial year in which the international transaction has been entered into. So long as the data relating to the financial year is available, it matters not, if the financial year followed is different. In the case before us the data relating to the relevant financial year of R.Systems International Limited is available. We are, therefore, entirely in agreement with the decision relied by ld. AR that if the data relating to the financial year in which the international transaction has been entered into is directly available from the annual accounts of that comparable, then it cannot be held as not passing the test of sub-rule(4) of rule 10B and the same is the view taken by Hon’ble Punjab & Haryana High Court in the case of CIT Vs. Mercer Consulting (India) Pvt. Ltd.[2016 (8) TMI 1163 - PUNJAB AND HARYANA HIGH COURT]. Being so, in our opinion data relating to the assessee financial year to be interpolated and thereafter if required, it should be considered as a comparable to the assessee’s case. With this observation we remit this issue to the file of TPO for his fresh consideration. Exclusion of Accentia Technologies Limited as comparable - main contention of ld. AR is this Accentia Technologies Ltd. is functionally not comparable to assessee, which is a BPO - The segmental data relevant to software services and product ITES are not available in the annual report. That company own intangibles. These facts were considered in the case of the coordinate bench in the case of Outsource Partners International Pvt. Ltd. [2017 (2) TMI 1410 - ITAT BENGALURU] and held that it cannot be a comparable case as in the case of assessee. Being so, we uphold the argument of ld. AR and direct the TPO to exclude the above comparable. Exclude Fortune Infotech Limited as comparable - As discussed in earlier year this comparable Fortune Infotech Ltd. was rejected as a comparable in the case of Outsource Partners International Pvt. Ltd. Vs. DCIT [2017 (2) TMI 1410 - ITAT BENGALURU] and it was held that it cannot be a comparable. Accordingly, we direct the AO/TPO to exclude the same. Exclusion of Jeevan Scientific Technology Limited - AR submitted that Jeevan Scientific Technology Ltd. cannot be considered as comparable to the assessee’s case as it fails service income filter of 75% as applied by the TPO. It is also submitted that DRP has itself excluded ICRA Online Ltd. as comparable but the fact that 75% of export earning filter needs to be applied as against 25% of export earning filter applied by the TPO. Therefore in our opinion these facts required to be examined by the TPO and if it is so ICRA Online Ltd. was excluded as comparable, this comparable is also to be excluded on the same basis. Accordingly, this issue is remitted to TPO for fresh consideration with this observation.
|