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2020 (12) TMI 469 - AT - Income TaxTP Adjustment - Comparable selection - HELD THAT:- As regards exclusion of comparables, the assessee has demonstrated that Accentia Technologies Ltd. and Fortune Infotech Ltd. both are functionally dissimilar to assessee’s ITeS Segment. In fact in Accentia Technologies Ltd. there is an influence to the pricing policy because of its possession of Brand Value/IPRs. Accentia Technologies Ltd. has also made acquisition/amalgamation which depicts that the company had plans to grow through tie-ups and acquisitions of other companies. As regards to Fortune InfoTech Ltd., there is a product development element which cannot be compared to the assessee’s functioning. Therefore, both comparables selected by the TPO i.e. Accentia Technologies Ltd. and Fortune InfoTech Ltd. should be excluded. We direct the TPO to exclude these two companies from the final set of comparables. As regards inclusion of R Systems International Ltd., this comparable company appears to be functionally comparable with the assessee company. The only point which TPO raised is related to different Financial Year ending. This cannot be the sole reason for rejecting any comparable.Therefore, we direct the TPO to include this comparable i.e. R Systems International Ltd. Accentia Technologies Ltd. and ICRA Online Ltd. (seg.) both are functionally dissimilar to assessee’s ITeS Segment. In fact in Accentia Technologies Ltd. there is an influence to the pricing policy because of its possession of Brand Value/IPRs. Accentia Technologies Ltd. has also made acquisition/amalgamation which depicts that the company had plans to grow through tie-ups and acquisitions of other companies. As regards to ICRA Online Ltd. (seg.), this company is functionally different and has three segment in which TPO has taken into account outsourced service segment which cannot be compared to the assessee’s functioning. Therefore, both comparables selected by the TPO i.e. Accentia Technologies Ltd. and ICRA Online Ltd. (seg.) Ltd. should be excluded. We direct the TPO to exclude these two companies from the final set of comparables. Jindal Intellicom Ltd. the Ld. AR pointed out that incorrect margin was taken by the TPO and prima facie it appears that the margin taken by the TPO is not proper. Therefore, we direct the TPO to take appropriate margin for taking this comparable i.e. Jindal Intellicom Ltd. in final list of comparables. Direct the TPO to include this comparable i.e. Microgenetics Systems Ltd.
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