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2019 (7) TMI 1663 - AT - Income TaxTP Adjustment - comparable selection - selecting good comparables to the assessee on several ground including the functional dissimilarity, non availability of segmental data and diversified activities besides high end use brand worth - HELD THAT:- Companies unrelated to service of export of data processing and back office support undertaken by the assessee need to be deselected from final list of comparability. Services rendered by the assessee are only back office operations falling in the category of ITES and not KPO. eClerx is not a good comparable at all to the assessee. Apart from that no segmental information is also available. The reasoning given by the ld. DRP in respect of AY 2011-12 equally applies to the facts obtaining in this year also. We, therefore, find eClerx not a good comparable and have to be deleted from the list of comparables for benchmarking international transaction. Exclusion of M/s Accentia Technologies and Infosys BPO on the ground that in respect of each comparable, certain extraordinary events had occurred during the previous periods which distorted the profitability thereby increasing the margin, cannot be characterized as unreasonable. Rejection of comparable not on the ground of functional dissimilarity, but only because of a different accounting period - As gone through the financials of this CG Vak Software the income from software development product and services is separately mentioned and was also at page 26, the segment revenue and segment results are also provided. In these circumstances, we are of the considered opinion that in the absence of any finding that this company is functionally dissimilar, ld. TPO should have considered these figures to identify whether CG Vak Software is a suitable comparable with the assessee. We, therefore, direct ld. TPO to consider this entity for benchmarking the international transaction. M/s Informed Technologies Ltd. and M/s Micro genetics Systems Ltd. Ld. TPO rejected the same on the ground that both the Companies sales are below ₹ 5 Crores - As relying on case of Chris Capital [2015 (4) TMI 949 - DELHI HIGH COURT]we hold that so long as a company is functionally similar to the assessee merely because it does not match with the turnover, it cannot be rejected. We, therefore, direct ld. TPO to include Informed Technologies Ltd. in the list of comparables. Interest of credit period granted by the company under normal trade practices - HELD THAT:- We are of the considered opinion that if working capital adjustment is granted, then no separate adjustment or interest receivables is required. We are fortified in our decision by the decision in case of Kusum Healthcare P. Ltd.[2017 (4) TMI 1254 - DELHI HIGH COURT] TPO/AO has erroneously interchanged operating profit/operating cost margin of the companies, namely, eClerx Services Ltd. and Omega Healthcare Management Services P. Ltd. and it requires rectification - HELD THAT:- Since it is not a part of adjudication but only a mistake that had crept in the order, we are of the opinion that the same could be rectified by the ld. TPO/AO. We, therefore, direct the same. Deduction u/s 10A in respect of AEGSC(STP) Unit set up by the assessee during the financial year 2002-03 on the ground that the STP unit was set up after splitting up its existing business of FCE(EOU) Unit - HELD THAT:- We direct the learned AO to allow the deduction u/s 10A of the Act for the Asstt. Year 2010-11 in respect of AEGSC(STP) Unit set up by the assessee during the Financial Year 2002-03. Grant of full credit to the assessee as claimed in the return - HELD THAT:- We are of the opinion that the ends of justice would be met by directing the ld. AO to verify the credit of TDS and allow the same to the assessee.
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