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2016 (9) TMI 1592 - AT - Income TaxTransfer pricing adjustment - data management services - TPO did not exclude two comparables viz. M/s Cosmic Global Ltd and M/s E4E Healthcare Business Services Pvt. Ltd. from the list of comparables - HELD THAT:- DRP had not adjudicated the correctness of the claim of the assessee solely for a reason that these companies were part of the list of the TP study of the assessment. By virtue of the decision of Special Bench in the case of Quartz Systems(P) Ltd [2011 (5) TMI 508 - PUNJAB AND HARYANA HIGH COURT], we are of the opinion that assessee can seek exclusion of a company though it appeared in the list of comparables if it could show before the authorities below that it was functionally different from it. In the case of CIT vs Quartz Systems (P) Ltd [2011 (5) TMI 508 - PUNJAB AND HARYANA HIGH COURT] had upheld the decision of the Special Bench cited supra for the single reason that the comparability of the companies for which exclusions were sought, were remitted to the lower authorities by the Tribunal. Accordingly, here also we are of the opinion that whether M/s Cosmic Global Ltd and M/s E4E Healthcare Business Services Pvt. Ltd. could be considered as good comparables have to be looked afresh by the Assessing Officer/TPO. We, therefore, set aside the orders of the authorities below and remit the issue regarding the comparability of M/s Cosmic Global Ltd and M/s E4E Healthcare Business Services Pvt. Ltd. back to the file of the Assessing Officer/TPO for consideration afresh in accordance with law. Assessee is free to raise all its objections against inclusion of the above companies before the Assessing Officer/TPO and these have to be considered by the Assessing Officer/TPO while passing the orders. Computation of the PLI of the comparable companies selected was not properly done - Profit level indicator considering the margins prior to depreciation would give better results in the comparable analysis and benchmarking of the transactions of the assessee in the given facts and circumstances. We direct the Assessing Officer/TPO to rework the PLI of the comparables after excluding the depreciation cost and benchmark the PLI of the assessee also excluding the depreciation cost. Ordered accordingly. Ground of the assessee are allowed for statistical purposes.
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