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2019 (8) TMI 609 - AT - Income TaxTP Adjustment - acceptance/rejection of certain comparables by learned Commissioner (Appeals) - functionally dissimilarity - HELD THAT:- Vishal Information Technologies Ltd. - It is now fairly well settled that this company cannot be a comparable to other companies due to its completely distinct business model. Time and again, it has been established that this company does not undertake ITeS itself, but, gets the work done by outsourcing to third party vendors. This is evident from the low employee cost of the company, as revealed from the annual report for the relevant period. The Co–ordinate Bench in DBOI Global Services Pvt. Ltd. [ 2016 (8) TMI 1292 - ITAT MUMBAI] , noticing that the employee cost of the company as a percentage of total cost works out to a meager 1.36% which proves the outsourcing of work, excluded the company as a comparable. Considering all the very same assessment year and were rendered on the basis of more or less common facts, respectfully following the cited decisions of the Tribunal, we uphold the decision of the learned Commissioner (Appeals) in excluding this company as a comparable, though, on the basis of our own reasoning. Cepha Imaging Pvt. ltd. - From the facts and materials placed on record including the annual report of this comparable, it is evident, the company is in the business of development and sale of software. That being the case, it is functionally different from the assessee as the assessee is admittedly an ITeS provider. The Co–ordinate Bench in DBOI Global Services Pvt. Ltd. [2016 (8) TMI 1292 - ITAT MUMBAI] having found that the company is engaged in software development service, excluded it as a comparable. Similar view was expressed by the Tribunal in other decisions cited by the learned Authorised Representative. Since, the aforesaid decisions are for the very same assessment year and the facts on the basis of which the company was excluded as a comparable are more or less common, respectfully following the aforesaid decisions of the Tribunal, we uphold the decision of the learned Commissioner (Appeals) on the issue. Assessee has furnished a chart before us computing the margin of the rest of the comparables after exclusion of Vishal Information Technologies Ltd. and Cepha Imaging Pvt. Ltd. As per the said chart, after exclusion of the aforesaid two companies, the average margin of the rest of the comparables works out to 18.53%. According to the learned Authorised Representative, the margin shown by the assessee would fall within ±5% range of the arithmetic mean of the rest of the comparables @ 18.53% requiring no further adjustment. - Decided against revenue
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