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2019 (2) TMI 817 - HC - Income TaxTPA - ICRA Online Ltd. from the list of comparables as being high profit margin company when Indian Transfer Pricing Regulation does not provide exclusion of same but arriving at the arithmetic mean of profit margin of the comparable companies - Held that:- The impugned order of the Tribunal also does not dispute the position in law as reiterated in Barclays Technology Centre India Pvt. Ltd. (2018 (8) TMI 574 - BOMBAY HIGH COURT) that mere high profit margin would not warrant an exclusion of a company from the final list of comparable. However, in the present case, the Tribunal has found on examination of facts that, the profit margin in the subject assessment year declared by ICRA Online Ltd. was abnormally high, taking into account the manner in which it conducted its business. This to conclude that the profit margin declared by ICRA Online Ltd. does not reflect a normal business trend and, therefore, was excluded from the list of comparable. This view of the Tribunal is essentially a finding of fact. The same is not shown to be perverse. Include ACE Softwares Exports Ltd. as comparable when its profitability cannot be worked out in the absence of segmental data - Held that:- The activities rendered by the respondent assessee in the application engineering segment which involves the use of CAD/CAM services, which are similar to ones performed by ACE Softwares Exports Ltd. These services namely; CAD/CAM services would fall under the broad category of IT Enabled Services and, therefore, would be broadly functionally comparable. We note that the Tribunal rendered a finding of fact that ACE Software Exports Ltd., was not a persistent loss making unit. It further found that the loss suffered in the subject assessment year is on account of normal business and not on account of factors beyond the normal business environment. We find that the Tribunal has rendered a finding of fact which has not been shown to be perverse in any manner. In the above view, the question as proposed does not give rise to any substantial question of law. The appeal is admitted on the substantial question of law at Sr. No.(i) above - Whether on the facts and circumstances of the case and in law, the Tribunal was correct in considering internal TNMM as most appropriate method when the relevant data for comparison is not available for transfer pricing analysis?
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