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2017 (4) TMI 866 - AT - Income TaxTransfer pricing adjustment - comparable selection - application of turnover filter - Held that:- The assessee is aggrieved by the order of Assessing Officer / TPO in considering the turnover range on cost basis instead of turnover basis and hence, the inclusion of Helios and Matheson Information Technology Ltd., which was identified as comparable even though its total turnover was ₹ 213.37 crores. The grievance of assessee in considering the turnover range on cost basis merits to be allowed. Various Benches of the Tribunal including the Pune Bench of Tribunal in series of cases have held that the turnover basis is to be adopted range for the selection of companies. The total turnover of the assessee was ₹ 14.37 crores, as against which we hold that the turnover filter of ₹ 1 to ₹ 200 crores merits to be applied. Since the turnover of Helios and Matheson Information Technology Ltd. was more than ₹ 200 crores i.e. ₹ 213.39 crores, then the same merits to be excluded from the final list of comparables. Accordingly, we hold so. The ground of appeal raised by the assessee is thus, partly allowed. Assessee which is providing software development services thus selection of comparable as companies functionality dissimilar with that of assessee need to dis-selected as final list of comparable. Non-allowance of risk adjustment - Held that:- We direct the Assessing Officer to allow the risk adjustment and re-compute the margins of comparables by applying the ratio laid down by Delhi Bench of Tribunal in the case of Sony India Pvt. Ltd. (2008 (9) TMI 420 - ITAT DELHI-H) and compute the TP adjustment, if any, in the hands of assessee. Assessee is against applicability of +/- 5% and the benefit can be allowed if the adjustment is within such range and hence, no adjustment is to be made in case it is not more than 5% from the arm's length price. We hold so. Allowance of payment made for meeting expenses, travel cost, stay cost, etc. - Held that:- uthorized Representative for the assessee pointed out that the said expenditure was part of operating cost and was recovered @ 7%. The factual aspects of this issue are not clear and the Assessing Officer/Transfer Pricing Officer is directed to redecide the same after allowing reasonable opportunity of hearing to the assessee. We hold so.
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