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2020 (3) TMI 1189 - AT - Income TaxTP Adjustment - comparable selection - functional similarity - HELD THAT:- Assessee is engaged in providing business support/liaising and coordination services companies functionally dissimilar with that of assessee need to be deselected from final list. Risk adjustment - assessee for rendering of support and coordination is remunerated at cost plus basis - HELD THAT:- The risk factors like marketing and business risk etc. which are normally associated with any independent entity are more as compared to the assessee which is a risk mitigated entity and is insulated from various kind of risk operating as a capital service provider. Accordingly, we agree with the assessee that risk adjustments are warranted in case of comparables on account of the difference in the risk profile of the assessee vis-à-vis the comparable companies. As brought on record that the Tribunal in assessee’s own case for the Assessment Year 2011-12 and 2012-13 has allowed the risk adjustment to the net margin of the comparable in order to align the risk profile of the assessee. The ld. counsel has also given the quantification of the risk adjustment which has been placed in the paper book at pages 447 to 449, wherein it has given the difference between the bank rates and SBI base rates and quantification factor as been laid down by the Sony India (P) Ltd. vs. DCIT [2008 (9) TMI 420 - ITAT DELHI-H] Accordingly, we direct the TPO to examine the assessee’s quantification of risk adjustment specifically where assessee has taken the difference between bank rates and SBI bank rate and the quantification done by the assessee of the risk adjustment on 10.50%, is correct or not. With this direction this issue is remanded back to the TPO/Assessing Officer.
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