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2020 (8) TMI 478 - HC - Income TaxTP Adjustment - comparable selection - Whether the Tribunal was right in holding that inclusion of companies with different financial years ending as comparables though Rule 10 B (4) of the Income Tax Rules refers only to data relating to the financial year of the assessee in which the international transaction has been entered into? - HELD THAT:- We confirm the finding of the Tribunal directing the exclusion of Infosys BPO Limited from the list of comparables. The conclusion arrived at by us is duly supported by the decision of the Hon'ble Division Bench of the Karnataka High Court in PCIT Vs. Swiss Re Global Business Solutions India [2018 (7) TMI 52 - KARNATAKA HIGH COURT] - As excluded from the list of comparables for the reason that it was a giant Company in the area of development of software Rejection of comparable selected by the assessee having different financial year - Tribunal followed the decision in R R Donnelley India Outsource Private Limited [2016 (8) TMI 1165 - ITAT CHENNAI] and remanded the matter back to the Assessing Officer by issuing similar direction as issued in the said order - HELD THAT:- The argument of the Revenue is that the direction is devoid of reasons. We do not agree with the said submission because the Tribunal had referred to the decision of R R Donnelley India Outsource Private Limited Vs. DCIT (supra). All the directions contained thereunder were issued and the position of law as applied by the Tribunal merits acceptance. Our views/conclusion is strengthened by the decision of the High Court of Delhi in PCIT Vs. Baxter India Pvt. Ltd [2018 (9) TMI 1894 - DELHI HIGH COURT ]. It is also a case arising out of an assessment for the year 2012-13, wherein the Court took note of the decision in the case of CIT-II Vs. Mckinsey Knowledge Centre Pvt. Ltd. [2015 (3) TMI 1226 - DELHI HIGH COURT]wherein it was held that if from the available data, the results for financial year can reasonably be extrapolated then the comparable cannot be excluded. No error in the order passed by the Tribunal on this issue Remove the Cosmic Global Limited from the list of comparables - Tribunal followed the assessee's own case in [2017 (2) TMI 1208 - ITAT CHENNAI] arising for the assessment year 2008-09 - therefore we find that the Tribunal was right in directing the Assessing Officer to exclude Cosmic Global Limited from the list of comparables. Suitable adjustment to account for differences in working capital position - Tribunal remanded the matter to the Assessing officer to rework the working capital adjustment - HELD THAT:- We find that the issue to be fully factual and no substantial question of law flows from it. While on this issue, we refer to the decision of the Division Bench of this Court in the case of Commissioner of Income Tax Vs. Same Deutz-Fahr India (P) Ltd. [2017 (12) TMI 631 - MADRAS HIGH COURT] wherein it was held that the right of appeal under Section 260A of the Act is not automatic and it is limited right of appeal restricted only to cases which involve substantial questions of law and it is not open to the High Court to sit in appeal over the factual findings arrived at by the Tribunal. Order of the Tribunal remitting the matter to the Assessing Officer to rework the working capital adjustment is affirmed and is not interfered as no substantial question of law arises for consideration on the said issue. Order granting risk adjustment at 2% - TPO had denied adjustments on the ground that the information is not readily available in the public domain to fine tune the margins of the comparables on the basis of standard benchmarks to adjust for the differential functional profile of the entities - HELD THAT:- Tribunal took note of the arguments of the assessee that they function under limited risk because they are a wholly owned subsidiary of their AE and they are a captive service provider and whereas the comparable Companies has independent entities, the assessee being a captive service provider is a very relevant factor. After noting the factual position, the Tribunal referred to the decision in M/s.KOB Medical Textiles Pvt. Ltd [2017 (5) TMI 1166 - ITAT CHENNAI] wherein the Tribunal held that the risk adjustment could be given only to Company to Company basis, considering the level of risk involved between the assessee and the comparable Companies adopting the percentage of risk adjustment granted thereunder. The Tribunal directed the Assessing Officer to grant 2% towards risk adjustment on adhoc basis. We find that no substantial question of law flows from this issue as it is entirely factual. Accordingly, the finding of the Tribunal on this issue does not call for any interference. Disallowance u/s 14A read with Rule 8D - HELD THAT:- This Court in the case of Commissioner of Income Tax, Central Board, Chennai Vs. Chettinad Logistics Private Limited [2017 (4) TMI 298 - MADRAS HIGH COURT] wherein it was held that Section 14A cannot be invoked. We note that the exempt income was earned by the assessee in the relevant assessment year. The Special Leave Petition filed by the Revenue as against this decision was dismissed by the Hon'ble Supreme Court on the ground of delay as well as on merits in the judgment reported in CIT, Chennai Vs. Chettinad Logistics Pvt. Ltd. [2018 (7) TMI 567 - SC ORDER]. Therefore the Substantial question of law has to be answered against the Revenue.
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