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2020 (4) TMI 402 - AT - Income TaxTP Adjustment - Rejection of benchmarking analysis performed by the Appellant - comparable selection - Some companies have been excluded by the DRP on the ground that they are loss making companies - HELD THAT:- While ascertaining whether the companies are persistent loss making or not, the quantum of loss suffered during the period under consideration is immaterial. The Tribunal in various decisions have only considered the period of loss and not the quantum of loss. Therefore, respectfully following the order of Tribunal in the case of John Deere [2016 (10) TMI 1238 - ITAT PUNE] we reject the objections raised by the learned DR on this issue and direct the TPO/Assessing Officer to include PSI Data Systems Ltd., SIP Technologies & Exports Ltd. and TVS Infotech Ltd. in the final set of comparables as they are not persistent loss making companies. Exclusion of KALS and E-Zest - KALS being functionally different should be excluded from the list of comparables as compared to assessee engaged in the business of development and distribution of software used in banking and finance industry. E-Zest is a product company and hence, cannot be compared with the assessee engaged in software development services. See AMBER POINT TECHNOLOGY INDIA PVT. LTD. AND VICE-VERSA [2018 (1) TMI 1318 - ITAT PUNE] Inclusion of these companies, i.e. Acropetal Technologies Limited, Cepha Imaging Private Limited and Polaris Retail Infotech Limited - HELD THAT:- The exercise of conducting transfer pricing study is to ascertain arm’s length price of international transactions of assessee with its AE. If in the process, the assessee has selected any wrong comparable, it is the duty of TPO to examine and reject the same before ascertaining arm’s length price of the international transactions. An inclusion of certain entity in the list of comparables by the assessee in transfer pricing study report cannot act as estoppel against the assessee if, at a later stage, assessee seeks exclusion of the said comparable on account of functional disparity or it fails to qualify any of the filters applied. Our view is fortified by the decision of Tribunal in the case of DCIT vs Quark Systems Pvt. Ltd [2009 (10) TMI 591 - ITAT, CHANDIGARH] - Therefore, we admit the additional ground of appeal raised by the assessee and restore it to the file of TPO/Assessing Officer for de novo examination of the comparables.Appeal allowed for statistical purposes.
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