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2020 (8) TMI 918 - AT - Income TaxTP Adjustment - comparable selection - HELD THAT:- E-infochips Bangalore Ltd be excluded on grounds of functional dissimilarity and non-availability of its segmental financial. E-Zest Solutions Ltd. having diversified activities without having any segmental information on record. In view of the matter, we order to exclude E-zest Solutions Ltd. from the final set of comparables. Infinite Data System Private Limited (Infinite) be exluded as functional dissimilarity and on ground of super normal profit to the tune of 1496%. Infosys Limited (Infosys) - Keeping in view the functionality and huge brand value and significant expenditure on R & D we find Infosys not a suitable comparable vis-à-vis taxpayer, hence, order to be excluded. Sonata Software Ltd. - Since the RPT/sales of Sonnata is 59.35%, thus apparently fails TPOs filter of 25%, this comparable is remitted back to the Ld. TPO to decide afresh after providing opportunity of being heard to the taxpayer. Sasken Communication Technologies Ltd is not a suitable comparable on ground of functional dissimilarity and business restructuring. Zylog is not a valid comparable on ground of extra ordinary event vis-à-vis taxpayer hence, order to be excluded. Grant of working capital adjustment - TPO / DRP have denied the benefit of working capital adjustment while computing the ALP on the ground that the assessee has not demonstrated that there is a difference in levels of working capital employed by the taxpayers vis-à-vis comparables - HELD THAT:- TP study referred to by the taxpayer for benchmarking its International Transaction shows that the complete detail has been provided to grant working capital adjustment. So, in view of the matter, we are of the considered view that the matter is required to be reconsidered by the TPO by providing opportunity of being heard to the assessee. Moreover working capital adjustment has been granted to the taxpayer in the earlier years and since then there is no change in the business model of the assessee. So, this issue is remitted back to the Ld. TPO.
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