TMI Blog2015 (3) TMI 14X X X X Extracts X X X X X X X X Extracts X X X X ..... nconsistency went unnoticed even by the DRP. The ITAT corrected the position and noticed that not having applied the turnover filter at the initial stage, the Revenue cannot take advantage, in the facts of the case, particularly when the turnover filter is not a test even in respect of the surviving comparable which are concededly part of the record. For the above reasons, no question of law arises. - Decided against revenue. - ITA 115/2015, C.M. APPL.3043/2015, 3044/2015 & 3045/2015 - - - Dated:- 24-2-2015 - Hon'ble Mr. Justices Ravindra Bhat And Hon'ble Mr. Justice R.K. Gauba For the Appellant : Sh. N.P. Sahni, Sr. Standing Counsel with Sh. Nitin Gulati, Jr. Standing Counsel For the Respondent : Sh. Deepak Chopra an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctional Net Margin Method (TNMM) indicating Rule 10B(1)(e) of the Income Tax Rules as the most appropriate method and benchmark for turnover, taking operating profit/operating cost as the Profit Level Indicator (PLI). The TPO, even while accepting the TNMM method as the most appropriate, rejected its analysis so far as it related to interpretation of the comparables. The assessee had, in this context, relied upon the data relating to seven comparable enterprises whose average unadjusted profit margin worked to 11.5%. The TPO determined that two out of these seven were not comparables. This determination, as it pertained to M/s. Cyber Media Events Private Limited was accepted by the assessee. The other - M/s. Capital Trust Ltd. was held not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es. Also the companies having very small turnover are to be excluded because the margins earned by these companies fluctuate to extremes because of the narrow base. Such Companies lack Competitive Strength, lack operational efficiencies and also lack human resources, which is the main strength of service sector. Therefore a company with a small turnover of ₹ 25 lacs cannot be taken as a comparable. Recently ITAT Delhi in the case of Haworth (India) Pvt. Ltd. (2011-TII-64-ITAT-DEL-TP) has held that 3 comparable having small turnover (Rs.18.78 lacs)) cannot be considered even if segmental information is available particularly when the comparable s main activity is different. This decision also pertains to MSS and squarely applies to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the comparable company. The assessee, which is represented and has been heard on the advance notice, on the other hand, highlights that the record indicates - and in fact the ITAT noticed that no turnover filter was applied by either of the parties at any stage and that the Revenue ought not to highlight this as a question of law in these given circumstances. 6. We are of the opinion that the ITAT s order does not raise a substantial question of law. As observed in the impugned order, as to whether the turnover filter is an appropriate one and applicable cannot be answered in the abstract and is entirely fact dependent. In the given facts of this case, the record indicates that the TPO chose to apply that filter but used it to exclude th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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