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2020 (6) TMI 154 - AT - Income TaxTP Adjustment - selection of comparable - HELD THAT:- We have gone through the T.P order and also DRP’s directions and have also considered the argument of the learned Counsel for the assessee that most of these companies are not comparable to the assessee in the light of the various decisions of the Tribunal in similar cases. We find that the assessee has returned a margin of 9.02% as against the average margin of the final comparables adopted by the TPO at 22.69%. It is the case of the assessee that the decisions of the ITAT on various comparables though cited by the assessee, have not been considered by the authorities below. Since both the parties have tentatively agreed for a remand of the issue to the TPO, we deem it fit and proper to set aside the issues to the TPO for denovo consideration. We make it clear that the TPO shall examine whether the assessee’s case is similar to the cases on which he has placed reliance upon and whether thedistinguishable factors for exclusion of the comparables in those cases also existed in the assessee’s case. If it is found that the assessee’s case is similar and the distinguishing factors exist, then the TPO shall exclude such companies from the final list of comparables and the TPO shall be free to adopt any other comparable companies if they are so comparable to the assessee. Provisions for bad debts being considered as non-operating expenditure in computing the margin of only 3 companies - HELD THAT:- We direct the AO/TPO to reconsider the same and bring out the reasons for considering the same as nonoperating in the case of these three companies only, because the AO/TPO have to follow a uniform and consistent manner in adopting a filter and cannot deviate from the same in respect of some companies. Foreign exchange loss - Whether an extraordinary item for the year and hence adjustment should be provided for the same? - HELD THAT:- We are not convinced that the foreign exchange loss is an extra-ordinary item in the year to the assessee alone. Similar foreign exchange loss would have been incurred by the comparable companies as well and therefore, it is not a distinguishing factor to be considered for arriving at the ALP of the international transaction.
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