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2020 (7) TMI 658 - AT - Income TaxTP Adjustment - Comparable selection - exclusion of comparable company namely International Flavors & Fragrances (I) Ltd (IFF) and inclusion of Ultra Industries Ltd (UIL) - TPO proposed to include IFF as a valid comparable company by taking view that the assessee while making TP research for comparable, rejected this company only on the ground of (RPT) related party transaction - HELD THAT:- Hon’ble Bombay High Court in CIT Vs PTC Software [2016 (9) TMI 1282 - BOMBAY HIGH COURT] while considering the question of law if the Tribunal erred in excluding comparable only on the ground that the said comparable had prepared the financial for the year ending on June against the assessee as on March. Rule 10B(4) of Income tax Rules, are clear and obligates that the data to be used for comparison should be data relating to the same financial year in which the international transaction were entered by the tested party. The contention of the revenue that mandates of Rule 10B can be ignored as difference of three months was also rejected. The case law relied by ld DR for the revenue in Pangea3 Legal Database System (P) Ltd Vs ITO [2017 (3) TMI 267 - ITAT MUMBAI] is not helpful to him as the quarter wise accounts for IFF is not available in the financial statements of this comparable. Even otherwise the decision of Jurisdictional High Court is having binding effect. Thus, considering the decision of the jurisdictional High Court, we affirm the order of ld. DRP for exclusion of IFF. In the result the ground No. 1 of revenue’s appeal is dismissed. Comparability of UIL - During the TP proceedings the assessee vide its letter dated 29.10.2012 ask to TPO to include this comparable as the data of this company was not available at the time of search. TPO rejected the prayer of the assessee by taking view that FAR (functions performed asset employed and the risk assumed) analysis was not done, and that in previous year this comparable was not taken though this company was appearing the search process of the assessee. DRP directed to include this comparable on the ground that the activities of this comparable is similar to the assessee. We have seen that the ld DRP has considered the import contents of this comparables as well as Synthite Industries and included solely on the basis of activities. Disallowance of bad debts - HELD THAT:- The Hon’ble Bombay High Court in CIT Vs Essar Technology Ltd [2015 (1) TMI 252 - BOMBAY HIGH COURT] while considering the question of law whether Tribunal was right in allowing the bad debts claimed by the assessee even the same were not offered as income in the earlier years as per the provisions of section 36(2)(1). The Hon’ble Court held that the Tribunal did not commit any error in recording a factual finding that in the present case that the bad debt can be written off as irrecoverable, otherwise that would also have gone contrary to the judgment of the Supreme Court delivered in the case of T.R.F. Ltd. v. CIT [2010 (2) TMI 211 - SUPREME COURT]. In the result this ground of appeal is allowed.
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