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2019 (4) TMI 2095 - AT - Income TaxTP Adjustment - comparable selection - upper limit on turnover while selecting the comparable companies - HELD THAT:- Decision rendered by the Tribunal in the case of Genesis Integrated Systems (I) P. Ltd. [2011 (8) TMI 952 - ITAT BANGALORE] lays down the correct law on the application of turnover filter and that decision has to be followed. In the decision rendered in the case of Genesis Integrates Systems (I) Pvt.Ltd., it has been held that companies with turnover of above Rs.200 crores cannot be compared with companies with turnover of less than Rs.200 Crores. In view of the aforesaid decision of the Tribunal, we hold that the CIT(A) erred in not accepting the claim of assessee for excluding of companies, whose turnovers were more than Rs. 200 Crores and those companies remain un-comparable with assessee, because assessee’s turnover was only Rs. 27.61 Crores. Two companies which would stand excluded by the application of turnover filter from the set of 10 set of companies chosen by the TPO are – (i) M/s. Infosys BPO Limited, whose turnover is Rs.1312 Crores and (ii) TCS E-Serve Limited, whose turnover is Rs.1578.40 Crores. Accordingly, we hold that the aforesaid two companies should be removed from the list of comparable companies. The TPO is directed to compute the average Arithmetic Mean profit of the comparable companies chosen by the TPO, after excluding the aforesaid two companies. Addition u/s 40(a) - Disallowance of provision for professional fees - non-deduction of taxes at source on such payments - assessee contended that the provisions of Section 40(a) cannot be invoked, where the assessee has merely made a provision in the books of account - HELD THAT:- We are of the view that in the absence of material to show that the liability-in-question was not contingent and had crystalised, this Tribunal has no other option to uphold the order of the CIT(A). Accordingly, the order of CIT(A) is upheld and Ground No. 15 raised by the assessee is dismissed. Forex loss - Disallowance of forex loss was on account of change in accounting method for accounting of forex gain/loss arising on account of inter-company foreign currency Receivables/Payables - HELD THAT:- This claim was rightly rejected by the Assessing Officer on the basis that prior period losses cannot be allowed as a deduction in a case where the assessee follows Mercantile Systems of Accounting. It is only loss which accrues and arises to an assessee for the period relevant to the previous year relevant to the AY. 2012-13 that can be allowed as a deduction. We are of the view that no fault can be found in the order of CIT(A). Consequently, Ground raised by assessee is dismissed.
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