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TMI Blog2016 (5) TMI 1183X X X X Extracts X X X X X X X X Extracts X X X X ..... ting and taxation services etc. to Siemens AG and its group companies, filed its return of income on 29.9.2009,declaring total income of Rs. 1.25 crores. The effective Ground of appeal is about making an addition of Rs. 63.88 lakhs under the provisions of Chapter- X of the Act. During the assessment proceedings, the AO found that the assessee-company had entered into international transactions. For determining the Arm's Length Price(ALP)of those transactions, he made a reference to the Transfer Pricing Officer(TPO).The TPO observed that the assessee had reported the international transaction with Associated Enterprises (AE.s) as under:- SN. Description of International Transaction Amount (Rs.) Method of Benchmarking 1. Provision o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PO held that the assessee had used multiple year data in a mechanical manner without giving justification or demonstration of the influence of data relating to years prior to the year in which the international transaction were carried out, that it had not considered data for FY.2008-09 in respect of two out of the six companies, that it had not satisfied in condition provided in Rule-10(4) of the income tax Rules, 1962(Rules), that the use of multiple year data was not justified . Accordingly, he directed the assessee to give the margin after considering the account for the FY 2008-09.The assessee gave the following details: SN. Name of the company Updated PLI for FY.2007-08 (%) 1. Cyber Media Online Ltd. 9.15 2. HSCC (I) Ltd. 18. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to what were the risks undertaken by each of the comparable companies, that it had also not quantified the risk undertaken by them with reference to factual particulars or financial data. 3. Aggrieved by the order of the TPO and draft order of the AO, the assessee filed objections before the Dispute Resolution Panel(DRP).Before it, the assessee stated that the TPO had disregarded search comparable undertaken by it, that out of six comparables five comparables were rejected as functionally non comparables, that only one comparable was considered in the final set of comparable used for computing the TP adjustment, that the TPO had selected CCSPL as comparable, that it had determined the ALP in accordance with section 92C (1)(2) of the Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e five comparables, that it had included CCSPL for making the TP adjustment, that if ICRA was included as comparable it would be within the permissible limit of +/-5%, that suffering of loss by ICRA should not result in exclusion of the company from comparable, that the TPO himself had included the result of ICRA while deciding the TP issues for earlier and subsequent year. He referred to the cases of Goldman Sachs (India) Securities Pvt. Ltd.(Income Tax Appeal No.2222 of 2013 dt.4.4.2016).The Departmental Representative(DR)supported the order/directions of the AO/DRP. 5. We have heard the rival submissions and perused the material before us. While preparing the TP report, the assessee had selected six comparables,that as per the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n our opinion, for determining ALP what is to be seen is the similarities of functions of the comparables not the commercial results. Profit and loss are the two sides of the same coin. So, if an assessee had suffered loss during a particular year it should not be excluded from the comparables' list. If ICRA was a good comparable in earlier and subsequent years because of the functional similarity it should have been included for arriving at ALP of the transaction. Here, it would be appropriate to refer to the judgment of Goldman Sachs (India) Securities (P.) Ltd. (supra). In that matter, the revenue had raised the following question of law for the consideration of the Hon'ble Bombay High Court:- "(a) Whether on the facts and in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order of the Tribunal inter alia relies upon its order in the case of Brigade Global v. ITO No. 1494/Hyd./2010 rendered by the company-ordinate Bench at Hyderabad - wherein it is held that only persistently loss making unit cannot be said as comparable. In this case, the impugned order holds on facts that Capital Trust Ltd. it is not a persistent loss making unit. Therefore, Capital trust Ltd. is comparable In our opinion, if the TPO himself had included ICRA as a comparable in earlier and subsequent years there was no justification for not including the same for the year under consideration on the ground that it had suffered losses. As stated earlier, if the results of ICRA are considered for TP purposes, the case will fall within the ra ..... X X X X Extracts X X X X X X X X Extracts X X X X
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