TMI Blog2019 (2) TMI 817X X X X Extracts X X X X X X X X Extracts X X X X ..... profit margin in the subject assessment year declared by ICRA Online Ltd. was abnormally high, taking into account the manner in which it conducted its business. This to conclude that the profit margin declared by ICRA Online Ltd. does not reflect a normal business trend and, therefore, was excluded from the list of comparable. This view of the Tribunal is essentially a finding of fact. The same is not shown to be perverse. Include ACE Softwares Exports Ltd. as comparable when its profitability cannot be worked out in the absence of segmental data - Held that:- The activities rendered by the respondent assessee in the application engineering segment which involves the use of CAD/CAM services, which are similar to ones performed by ACE S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g questions of law for our consideration : (i) Whether on the facts and circumstances of the case and in law, the Tribunal was correct in considering internal TNMM as most appropriate method when the relevant data for comparison is not available for transfer pricing analysis ? (ii) Whether on the facts and circumstances of the case and in law, the Tribunal was correct when it excluded ICRA Online Ltd. from the list of comparables as being high profit margin company when Indian Transfer Pricing Regulation does not provide exclusion of same but arriving at the arithmetic mean of profit margin of the comparable companies? (iii) Whether on the facts and circumstances of the case and in law, the Tribunal was correct when it directe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2014 wherein it was observed that high profit margin by a comparable would not by itself justify exclusion from the list of comparable from the comparable analysis. This, of course, if the high profit margin is a normal business condition and not peculiar to the comparable. After noting the above decision of the Special Bench of the Tribunal, the impugned order has found that high profit margin declared by ICRA Online Ltd. does not reflect the normal business profitability. The profit margin for the subject assessment year of ICRA Online Ltd. was 63.33% which was quite abnormal, taking into account the fact that, the profit margin for preceding years was 8.59% and 25.98% while the profit margin for subsequent year was 26.78%. Thus, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... declared by ICRA Online Ltd. does not reflect a normal business trend and, therefore, was excluded from the list of comparable. This view of the Tribunal is essentially a finding of fact. The same is not shown to be perverse. (e) In the above view, the question as proposed does not give rise to any substantial question of law, as the view taken by the Tribunal on facts is a possible view. Thus, not entertained. 4. Regarding question no. (iii) (a) The respondent assessee was also providing design engineering services to its AEs. For determining the ALP of the respondent assessee's transactions in providing engineering services to its AEs, the Assessing Officer as well as the DRP rejected the plea of the respondent assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount of external factors. Thus, the Tribunal while allowing the appeal of the respondent, concluded that the prayer of the respondent that ACE Softwares Exports Ltd. should be included in the final set of comparables has to be accepted. (c) Mr. Suresh Kumar, learned Counsel appearing for the Revenue submits that functionally activities rendered by the respondent assessee and M/s. ACE Softwares Exports Ltd are not comparable, therefore, M/s. ACE Software Exports Ltd., is not comparable. Moreover, the fact that the comparable had incurred a loss in the subject assessment year has been correctly excluded from the final list of comparable by the Assessing Officer. (d) We find that that the Tribunal in the impugned order has analyzed t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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