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2022 (3) TMI 252 - AT - Income TaxTP Adjustment - comparable selection - inclusion of M/s. CG VAK Software and Exports Ltd. as a comparable for benchmarking the international transactions entered into by the assessee with its associated enterprises - HELD THAT:- Upon examination of the annual reports for financial years 2007-08, 2008-09 and 2009-10 of M/s CG VAK Software & Exports Ltd., which are forming part of the paper book, we find that the company had earned profit of 3.81% in financial year 2008-09 and profit of 0.29% in financial year 2009-10 in the BPO segment. Thus, M/s CG VAK Software & Exports Ltd. (segmental) does not satisfy the criteria of being a persistent loss making company, as in 2 out of 3 past consecutive financial years the company was earning profit. Accordingly, we are of the view that the DRP has rightly directed inclusion of M/s CG VAK Software & Exports Ltd. (segmental) as a comparable for benchmarking the international transactions pertaining to ‘Provision of ITeS Services’ and ‘Provision of Research Support Services’. As a result, ground no. 1 raised in Revenue’s appeal is dismissed. M/s CG VAK Software & Exports Ltd. cannot be held to be incomparable simply on the ground of low turnover, unless it is demonstrated that the functions, assets and risk are completely different and are incomparable. Accordingly, the additional grounds raised by the Revenue are dismissed.
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