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2018 (10) TMI 1262 - AT - Income TaxDetermination of arm's length price of international transaction qua selection of comparables - Held that:- Assessee is primarily engaged in the business of provision of IT enabled services in the area of medical transcription to its associates enterprise and it provides such services exclusively to its foreign AE i.e. M/s. Heartland Medical Information services inc., USA. Assessee is remunerated on total cost plus basis for services rendered, thus on account of different business model, we direct the ld AO/ TPO to exclude the indifferent companies for comparability study. Merely because the assessee is carrying on its business through different tools simply cannot make it non comparable, if the functions performed by them and various filters applied in accept/ reject matrix allows it to be included. The assessee is relying on Annexure A to the Director's report where the assessee is required to show the efforts made by it in technology absorption and innovation. Further, the report says that the company has made considerable progress in development of its own web based software. Therefore, it is apparent that for the year it did not carry its business with different tools need to be added. The nature of filter applied by the TPO which is generally not applicable in service industry. The non utilization of the assets or under utilization thereof may be internal inefficiency built in of the comparable company however, when it is functionally comparable it cannot be rejected.
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