TMI Blog2016 (5) TMI 1183X X X X Extracts X X X X X X X X Extracts X X X X ..... 18.12.13, of the Assessing Officer (AO) passed in pursuance of directions of DRP, dtd. l3.10.13, u/s. 143(3) r.w.s 144C(13) of the Act, the assessee has filed the present appeal. 2. Assessee-company, engaged in the business of rendering of services like corporate treasury, financial reporting and taxation services etc. to Siemens AG and its group companies, filed its return of income on 29.9.2009,declaring total income of ₹ 1.25 crores. The effective Ground of appeal is about making an addition of ₹ 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 of business support services 10,76,17,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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. 18.66 3. Educational Consultants (India) Limited 2.34 4. IDC (India) Limited 10.34 5. ICRA Management Consulting Services Ltd. -1.84 6. Indiacom Limited Nil Arithmetic mean 7.73 He directed the assessee to file justification as to how the company selected by it were functionally com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and not available at the time of determining the ALP was not as per the provisions of the Act, the TPO had not granted working capital/risk adjustment at the time of comparability analysis. After considering the elaborate submission of the assessee and the orders of TPO/AO, the DRP held that analysis and facts brought on record by the TPO for rejecting the five comparables was fair and was in order, that for the purpose of comparability it is essential to consider the activity/functions performed by the company along with the other things, that the TPO had found defects in the TP study carried out by the assessee, that the TPO had rightly rejected the assessee's functional analysis, search process and the comparables on the basis of difference in functionality and organisational structure, that financial results of ICRA Management Consulting Services Ltd.(ICRA.)were very unusual and abnormal in the relevant service line, that the TPO had rightly rejected such an entity from the set of comparables, that such a company could have serious issues of continuity and survival. Accordingly, the DRP issued directions to the AO. 4. During the course of hearing before us, the author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nctions 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 the circumstances of the case and in law, the Tribunal was justified in law in considering partly irrelevant material and in accepting Capital Trust Limited as a comparable and thereby ignoring accepted Transfer Pricing Audit practice that persistent loss making concerns are not to be considered as comparable in cases of profit making concerns? The Hon'ble High Court had dealt the issue as under :- (a) The Respondent-Assessee urged before the Tribunal that the upward adjustment of ₹ 1.60 crores by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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