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2019 (4) TMI 1609 - AT - Income TaxTPA - comparable selection - functional similarity - HELD THAT:- Assessee has categorized itself as a professional service provider in the I.T. industry thus companies functionally dissimilar with that of assessee need to be deselected from final list. Thirdware Solution Pvt Ltd - perusal of the annual report reveals that there is no segmental reporting. In our understanding of the facts, even if the Revenue from the three services mentioned at b), c) and d) above comprises of 90% of the total sales, still segmental reporting is a must to justify the inclusion of this comparable. Though the first appellate authority has excluded this company on the ground that it has supernormal profits, but that is not a good reason for excluding this company, but having no segmental accounts make this company excluded from the final set of comparables. Though we do not agree with the exclusion on the point of super normal profits, but nevertheless, for want of segmental reporting, we direct for exclusion of this company from the final set of comparables. L & T - there is no dispute that the same was excluded by the TPO for related party transactions. Therefore, inclusion of the same in the final set of comparables is uncalled for and deserves to be excluded. Working capital adjustment - since the assessee has filed a detailed working of the working capital adjustment the same cannot be dismissed on the ground that the assessee is in the service industry - we direct the TPO to grant working capital adjustment. See SUN LIFE INDIA SERVICE CENTRE PVT. LTD VERSUS DCIT, CIRCLE-2, GURGAON. [2015 (10) TMI 2431 - ITAT DELHI] The assessee is directed to furnish afresh a detailed working of the working capital adjustment. The TPO is directed to examine the same and decide the issue. Admission of additional ground - ground raised by the Revenue which states that the CIT(A) erred in not including M/s Infosys as one of the comparables, which was left out by the TPO due to inadvertence - HELD THAT:- We are of the opinion that merely because of provisions of section 154 or section 263 of the Act were available with the revenue, it cannot preclude revenue to raise additional ground before us. Therefore, additional ground is admitted. A perusal of the TP study shows that the assessee did include M/s Infosys in its list of comparables. The TPO made a fresh search during the TP assessment proceedings and from his fresh search, the TPO excluded certain comparables and made a final list of comparables as mentioned elsewhere. The exercise so done by the TPO does not leave any room for assumption that inadvertently he has not included M/s Infosys in the final set of comparables. On the contrary, it appears that non inclusion was intentional. Plea of the Revenue that the ld. CIT(A) erred in not including M/s Infosys as one of the comparable is ill-founded because the assessee was in appeal before the ld. CIT(A) and since the assessee had no grievance for non inclusion of M/s Infosys how could the ld. CIT(A) have adjudicated on inclusion of Infosys unless he wanted to exercise his powers of enhancement. No merit in additional ground raised by the Revenue.
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