Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2018 (3) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2018 (3) TMI 1565 - AT - Income TaxDetermination of arm’s length price under section 92C - comparability analysis - Held that:- Once there is functional comparability keeping into consideration the assets employed and risks, then exclusion of some companies whose functions are broadly similar on the ground that it was loss making, cannot be sustained. We are therefore of the view that the two companies excluded by the TPO from the list of comparable companies on the ground that they were making loss that too at the net level, cannot be sustained. CIT(A) in our view erred in confirming the action of the TPO. The special bench ITAT Chandigarh in the quark systems (P) Ltd.[2009 (10) TMI 591 - ITAT, CHANDIGARH] has taken a view that merely because a comparable is making loss, it cannot be excluded from the list of comparable companies for the purpose of computation of arm’s length price. The other decision cited by the Assessee before the CIT(A) also supports the same view. We direct the TPO to include the aforesaid two loss making companies also in the list of final comparable companies. If the two companies are included then the price of the disputed international transaction carried out by the Assessee is within the (+) (-) 5% range difference permitted by the 2nd proviso to Sec.92CA(2) of the Act. Therefore addition on account of adjustment to ALP should be deleted.
|