TMI Blog2013 (11) TMI 1314X X X X Extracts X X X X X X X X Extracts X X X X ..... ings are distorted – Reliance has been placed upon the judgment in the case of Automation India Ltd. v. Dy. CIT [2009 (2) TMI 736 - ITAT PUNE].[IT Appeal No. 4 (PN) of 2008, dated 11-2-2009], wherein it has been held that it is mandatory for the purposes of comparing the data of an uncontrolled transaction with an international transaction that the same must relate to the financial year ending similar to that of the assessee – Hence, excluded from the list of comparable. - IT Appeal No. 8499 (Mum.) of 2010 - - - Dated:- 28-2-2013 - R.S.Syal and Amit Shukla , JJ. For the Appellant : Ajeet Kumar Jain. For the Respondent : Kanchan Kaushal. ORDER:- PER : R.S. Syal This appeal by the Revenue arises out of the order passed by the Commissioner of Income-tax (Appeals) on 20.09.2010 in relation to the assessment year 2008-2009. 2. The only issue raised through various grounds is against the deletion of adjustment of Rs. 2,50,29,070 made by the Transfer Pricing Officer (TPO). Briefly stated the facts of the case are that CP Ships (UK) Limited is one of the world's leading container shipping companies providing international container transportation services in four ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TPO observed that this company was in ITES both as per Board's Notification and also D B Websites. As the assessee had not considered this case, the TPO held it as comparable and included it in the list of comparables. The assessee contended before the learned CIT(A) that the said company was functionally incomparable as it was mainly engaged in software and application development. The learned CIT(A) considered the Annual report of this company and observed that it referred mainly to the income from export sales of software as against the assessee's business of ITES. Accordingly this case was excluded from the list of comparables. 4.2 The ld. AR mainly relied on the decision of the Mumbai Bench of the Tribunal in the case of Asstt. CIT v. Maersk Global Service Center (India) (P.) Ltd. [(2011) 133 ITD 543 (Mum.)] to bring home the point that the case of Cepha Imaging Private Limited should be excluded as the same has been held by the Tribunal in that case as incomparable. 4.3 Sections 92 to 92F fall in Chapter X of the Income-tax Act, 1961 (hereinafter called 'the Act') with the marginal note of 'Special provisions relating to avoidance of tax'. The avowed object of such provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ategory of cases of similar nature of goods or services, a particular case, say A, may be comparable to one case, say X, on the basis of a particular filter, but not comparable to another, say, Y on the basis of another filter. It is still further possible that the case A may be comparable to another case Z on the basis of still another filter. So, simply because one case has been found to be incomparable to a particular case within the overall category of cases of similar nature of goods or services, does not necessarily mean that such case becomes incomparable to all the cases under such broader category and vice versa. It may be quite possible that a case found to be incomparable to one case on the strength of one specific filter, may be comparable to another on the strength of the same specific filter. The contention that since a particular case has been rejected by the Tribunal as comparable in one case, should invariably be rejected in all other cases, is not well founded. One needs to find out the filter on the basis of which such case was found to be incomparable in the first case. If such a filter is not relevant in the other case, then there can be no reason to outrightly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... our attention towards Annual report of Vishal Information Technologies Limited, which is a division of Amex. It was stated that Vishal Information Technologies Limited was in its BPO Division with 500 seats in Chennai. As it was a full-fledged data processing unit, the ld. DR argued that the same was rightly included by the TPO in the list of comparables. The learned AR opposed the contention of the learned Departmental Representative by stating that Vishal Information Technologies Limited was basically outsourcing services as was apparent from the details of its expenses as per schedule 15 and 16 of the Profit and loss account for the relevant year. It was shown that Data entry charges and vendor payments were to the tune of Rs. 12.90 crore as against the Personnel cost at Rs. 19.70 lakh. He also invited our attention towards Prospectus of Vishal Information Technologies Limited, though relevant to the previous year ending for 31.03.2008, to contend that the expansion plan was embarked upon in a subsequent year when the employees strength increased to 210 as full time employees and 100 second-line operators as on 1st September, 2007. The learned AR contended that the mention of st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e than 25% of the total revenue. The Delhi Bench of the Tribunal in the case of ACTIS Advisers (P.) Ltd. v. Dy. CIT [IT Appeal Nos. 5277 (Delhi) of 2011 958 (Delhi) of 2012, dated 12-10-2012] has held that a case can be taken as uncontrolled if its related parties transactions do not exceed 25% of the total revenue. In reaching this conclusion, the Tribunal took assistance from various provisions of the Act. Thus, it is discernible that the limit of 25%, though not expressly set out in the statute, cannot at the same time be branded as ad hoc. The Delhi Bench of the Tribunal has taken assistance from certain other provisions of the Act for the adoption of such limit. This decision has been followed by the Mumbai bench of the Tribunal in its recent order passed on 27.02.2013 in Thyssenkrupp Industries India (P.) Ltd. v. ACIT (ITA No. 6460/Mum./12). Respectfully following the precedents, we approve the filter of 25% related transactions. Even though CMC Ltd. is engaged in ITES but still it cannot be considered as comparable because of its related party transactions exceeding 25%. We, therefore, overturn the impugned order on this issue and direct that this case be excluded from the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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