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2020 (7) TMI 817 - AT - Income TaxTP Adjustment - adjustment to the Arm’s Length Price of the assessee’s international transaction - Comparable selection - ‘Persistent loss’ making companies - HELD THAT:- A company can be accepted as comparable if it has not suffered persistent losses. The expression ‘persistent loss’ is not defined under the Act or the Rules framed thereunder. The expression has evolved in judicial rulings. One of the initial decisions of Tribunal supporting this principle is Bobst India (P.) Ltd. vs. Dy. CIT [2015 (12) TMI 684 - ITAT PUNE] ‘Persistent loss’ means losses in three consecutive financial years including the Financial Year corresponding to the Assessment Year under dispute and immediately two preceding Financial Years. The thumb rule of excluding persistent loss making company has been accepted in various judicial precedents over the period of time. The company at Sr.No.1 has suffered losses in only one year and the companies at Sr. No.2 & 3 have incurred losses in two financial years. Thus, none of the above said three companies fall within the ambit of persistent loss making companies. The CIT (A) has directed the TPO to include AMI Computer (I) Ltd., Mercury Travels Ltd. and Nucleus Netsoft & GIS India Ltd. as these are not continuous loss making companies. We concur with the findings of CIT (A). The impugned order is upheld, ergo, the appeal of revenue is dismissed sans merit.
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