Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2021 (9) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (9) TMI 1322 - ITAT DELHITP Adjustment - Comparable selection - HELD THAT:- We find that while “Just Dial” is a search engine for multifarious activities and is a search engine using different platforms, dealing with multiple products whereas the assessee is a captive liason and marketing service provider for its AE. Hence, we hold that “Just Dial” cannot held to be a right comparable. Working Capital Adjustment - With regard to capital adjustment, we find that the ld. DRP allowed the working capital adjustment, however the AO failed to take the cognizance of the same while giving effect to the ld. DRP directions. Hence, the AO is directed to rectify the or der to that extent. Risk Adjustment - TPO denied risk adjustment on the grounds that the assessee has not clearly shown that the comparables had actually undertaken risks - whether the risk of having a single customer is equivalent to the marketing and technical risks attached to the comparable? - HELD THAT:- In the instant case, it can be seen that the assessee has not encountered the risk of having a single customer, whereas the same cannot be said as regards the comparables. The comparables were dealing in open market and therefore, they were prone to the marketing and technical risks. They would invariably incur certain expenditure on marketing services and also to safeguard the technical inputs used by them. In such a case, the risk encountered by the assessee cannot be said to be the equivalent risks attached to the comparables. The risk attributed to the assessee by the TPO is an anticipated risk whereas the risk attributed by the assessee to the comparables is an existing risk. In such situation, we direct that the risk adjustment be accorded to the net margin of the comparables for bringing them on par with the assessee company. Administrative Support Services - whether in fact the services were rendered and availed by the assessee and if so, whether the mark-up of 5% can be considered as comparable with the market averages? - Culling from the details filed and arguments of both the parties, we find that there is no dispute about availing of the services. The evidences include the e-mails, invoices, agreements submitted - The assessee has also provided details of cost allocation - Hence, it cannot be said that the services have not been provided to the assessee. With regard to the mark-up of 5% paid by the assessee, we find that the economical analysis submitted by the assessee is acceptable at the same time, the comparable namely, Pay Cheques. Inc. showing the OP/OC of 56.12% is being excluded owing to the extraordinary profits. Taking into consideration, the remaining comparables, we find that the arithmetic mean is more than the 5% mark-up charged from the company. Hence, we hold that no adjustment is called for while determining the ALP on account of payment for Intra Group Services.
|