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2021 (7) TMI 828 - AT - Income TaxTP Adjustment - application of turnover filter in choosing comparable companies - HELD THAT:- As far as excluding the companies on the basis of turnover is concerned, the issue has been settled in several decisions of the Tribunal and has been elaborately discussed by this Tribunal in the case of Autodesk India Pvt. Ltd. v. DCIT [2018 (7) TMI 1862 - ITAT BANGALORE]. The Tribunal in this decision after review of entire case laws on the subject, considered the question, whether companies having turnover more than 200 crores upto 500 crores has to be regarded as one category and those companies cannot be regarded as comparables with companies having turnover of less than 200 crores. The five companies Larsen & Tourbo Infotech Ltd, Persistent Systems Ltd.,Tech Mahindra Ltd, Mindtree Ltd and RS Software India Pvt. Ltd.should be excluded from the list of comparable companies. We hold and direct accordingly. The learned DR however pointed out that the Assessee did not raise this issue of turnover filter before AO and raised it before DRP in which the turnover limit of ₹ 1000 crores alone is mentioned. In our opinion, this will not be very material, as the turnover filter of ₹ 200 crores has been applied in several cases by this Tribunal. The Assessee cannot be denied the right to seek its exclusion before the Tribunal and in this regard the learned counsel for Assessee has rightly placed reliance on the decision in the case of DCIT v. Quark Systems (P.) Ltd. [2009 (10) TMI 591 - ITAT, CHANDIGARH] for the proposition that the Assessee cannot be precluded from seeking exclusion of a company selected by it in its TP study, when the company is otherwise not comparable to the Assessee. We therefore direct exclusion of the aforesaid 5 companies from the list of comparable companies. Treating provision for bad and doubtful debts as part of non operating expense while computing operating margin of comparables - On this issue, which is raised for the first time, we do not find any grounds raised before the lower authorities and hence this ground does not arise out of the order of the AO and hence dismissed.
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