Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2019 (4) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (4) TMI 56 - AT - Income TaxTP adjustment - upward adjustment in ITES segment - CIT(A) directed exclusion of two concerns from final list of comparables i.e. Infosys BPO Ltd. and Eclerx Services Ltd. - assessee has pointed out that two concerns i.e. Accentia Technologies Ltd. and Informed Technologies Ltd. need to be excluded from final set of comparables - HELD THAT:- The assessee was engaged in business of BPO services thus companies functionally dissimilar with that of assessee need to be deselected from final list. Eclerx Services Limited is not a comparable company as engaged in KPO services. Accentia Technologies Ltd. cannot be selected in the final list of comparables as during the year under consideration, there was an extraordinary event of amalgamation. Jeevan Softech Ltd. - We direct the Assessing Officer / TPO to work out the correct PLI of said concern and then determine the average margins of comparables in order to compute arm’s length price of international transactions. Informed Technologies Ltd. has been showing different profitability from year to year and such a concern cannot be picked up as being functionally similar because of abnormal profitability trend. Accordingly, we direct the Assessing Officer / TPO to exclude Informed Technologies Ltd. from final list of comparables. Claim of risk adjustment out of margins of comparables - HELD THAT:- The issue of allowability of risk adjustment stands settled by various decisions of different Benches of Tribunal and applying the same parity of reasoning, we direct the Assessing Officer to allow risk adjustment @ 20% to the margins of comparables and compute the transfer pricing adjustment, if any, in the hands of assessee accordingly. The Assessing Officer / TPO shall afford reasonable opportunity of hearing to the assessee before finally computing arm’s length price of international transactions in line with our directions in the paras hereinabove. In the final analysis, we summarize our decision i.e. concerns Eclerx Services Ltd., Accentia Technologies Ltd. and Informed Technologies Ltd. are to be excluded from final list of comparables; the PLI of margins of Jeevan Softech Ltd. need to be re- computed and further risk adjustment is to be allowed @ 20% and not 2%. Assessee appeal allowed.
|