TMI Blog2014 (4) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... MI 583 - ITAT HYDERABAD] The Hon'ble Delhi High Court has also upheld this view in case of Agnity India Technologies (P.) Ltd. [2013 (7) TMI 696 - DELHI HIGH COURT] - while applying the turnover filter a fixed upper limit cannot be applied uniformly and across the board in all cases. The upper limit has to be fixed reasonably, keeping in view the turnover of the assessee in a given case. - Decided in favor of assessee. Regarding onsite revenue filter and employee cost filter - Held that:- the issues are squarely covered by the decision of the coordinate bench in assessee's own case [2013 (10) TMI 747 - ITAT HYDERABAD] - CIT (A) was correct in holding that rejection of comparables selected by the assessee by applying this filter is not correct. - loss making companies and companies having super normal profits cannot be considered as comparables - AO to decide the said issues following the earlier decision - Matter remanded back - Decided against the revenue. - ITA No. 1716/Hyd/2011 - - - Dated:- 27-9-2013 - CHANDRA POOJARI AND SAKTIJIT DEY, JJ. For the Appellant : A. Gopal. For the Respondent : D. Sudhakar. ORDER:- PER SAKTIJIT DEY, J.M. This appeal prefe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 31,817/-. In terms with the order by the TPO, the Assessing Officer passed draft assessment order incorporating the transfer pricing adjustment made by the TPO. The assessee challenged the draft assessment order by raising objections before the DRP. The DRP, however, upheld the draft assessment order passed in terms with the adjustment recommended by the TPO except excluding one of the comparables adopted by the TPO i.e. Celestial Labs Ltd. As per the directions made in the order passed by the DRP, the impugned assessment order was passed by the Assessing Officer by only excluding M/s Celestial Labs Ltd. from the list of comparables and accordingly determined the ALP. 4. Being aggrieved of the assessment order and the order passed by the DRP, the assessee is in appeal before us. 5. The learned AR has submitted before us a brief note summarizing his contentions to the following seven issues: "1. No adjustment required as there is no allegation of shifting profits from one tax jurisdiction to another especially when the assessee is eligible to claim deduction u/s 10A of the Act. 2. Most appropriate method to determine ALP is CPM and not TNMM. 3. Turnover Filt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at this filter should not have been applied by TPO since relevant information/material required for the same are not available in public domain. He further submitted that the TPO has not applied this filter uniformly while selecting comparables. The learned AR submitted that the Tribunal has disapproved such approach of the TPO in the order passed in case of the assessee for the AY 2005-06. 11. So far as application of Employee Cost Filter is concerned, the learned AR submitted that this filter cannot be applied for selecting comparables since many companies report employee cost under various heads like software development charges, project charges, product development charges, professional charges etc. instead of reporting the same as employee cost. The learned AR submitted, the Tribunal in assessee's own case for the assessment year 2005-06 has held that against application of this filter as relevant data/information are not available. 12. The learned AR finally submitted that the Assessing Officer/TPO may be directed to determine the ALP in terms with the direction given in the order passed by the Tribunal in assessee's own case for the AYs 2005-06 and 2006-07. 13. The lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o question and is within the legislative competence to effectuate the charge of taxing real income in India." The Income-tax Appellate Tribunal, Bangalore Bench in case of SAP Labs India (P.) Ltd. v. Asstt. CIT (ITA No.398/Bang./2008) dated 30th August, 2010while considering identical issue held in the following manner: "The argument of the assessee with reference to sec. 10A status also needs a mention. It is the case of the assessee that it is enjoying sec. 10A benefit and no tax is payable on export income, which makes the Indian tax rate more attractive than German tax rate and therefore, there could be no motive to understate assessee's income. This argument could be a good logic, but only for those assessment years covered by sec. 10A benefit. Once the benefit is exhausted, the assessee would be liable for taxation in which case, the German tax rate may be more attractive. If the pricing for the exempted years is accepted without analysis there is every chance that the assessing authority might be estopped, on the doctrine of consistency, from examining the pricing for the subsequent non-exempted years. This is quite uncalled for. " In view of the af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h in the case of Simontech (supra) has held that no separate adjustment is required on account of risk and functional difference, the Income-tax Appellate Tribunal Delhi Bench in the case of Sony India (P.) Ltd. v. Dy. CIT [2008] 114 ITD 448 has held that deduction on account of ownership of intangibles, risk factors can be allowed. In aforesaid view of the matter, we are inclined to accept the view favourable to the assessee. We therefore uphold the direction of the CIT (A) in this regard in allowing the benefit of risk adjustments at 1%. Accordingly, the ground raised by the department is dismissed." 19. Since the issue under consideration is identical to that of the case of the assessee in AY 2005-06 and 2006-07 (supra), respectfully following the decision of the coordinate bench in the said years, we allow the benefit of risk adjustments at 1%. This ground is allowed. 20. As regards the 5th and 6th issues relating to onsite revenue filter and employee cost filter, we find that the issues are squarely covered by the decision of the coordinate bench in assessee's own case for AY 2005-06 and 2006-07 (supra) wherein the coordinate bench vide para No. 12 in its order, held as fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
