TMI Blog2019 (8) TMI 888X X X X Extracts X X X X X X X X Extracts X X X X ..... rd. - IT (TP)A NO. 3463/DEL/2013 - - - Dated:- 19-6-2019 - SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER For The Assessee : Shri G.C. Srivastava, Adv. And Shri Parichay Solanki, Adv. For The Respondent : Ms Saweta Nakra, Sr. DR ORDER PER SUDHANSHU SRIVASTAVA, JM This appeal is preferred by the assessee against the order passed by the Ld. Commissioner of Income Tax (Appeals), Rohtak {CIT (A)} vide order dated 28.03.2013 for assessment year 2005- 06. 2.0 Brief facts of the case are that Comverse Technology Inc. which is the ultimate holding company of the group was incorporated in the year 1984 and is engaged in designing, developing, manufacturing, marketing and supporting telecommunication systems and software for multimedia, communications and information processing applications. The holding company, through its various subsidiaries, primarily makes communication systems and software that telecom companies use to offer call answering, voice/fax mail, communications surveillance and recording etc. The assessee is a subsidiary of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Engineers Limited 2.3 However, the TPO accepted some of the assessee s comparables and included some more comparables on his own. The final set of comparables, as determined by the TPO, was as under:- i) ICRA Limited ii) Tera Software iii) Toyo Engineering Limited iv) Grintex India Limited v) Vital Communications Limited vi) Otis Elevators Limited vii) TCE Consulting Engineers Limited 2.4 The TPO, thereafter, proceeded to compare the mean margin comparables at 21.63% and proposed a transfer pricing adjustment of ₹ 1,56,10,332/-. The assessment was completed at an income of ₹ 2,46,10,382/- after making a transfer pricing adjustment as proposed by the TPO. 2.5 Aggrieved, the assessee approached the Ld. First Appellate Authority and the Ld. Commissioner of Income Tax (Appeals) allowed partial relief to the assessee by directing exclusion of ICRA Limited and Otis Elevators Limited. Still aggrieved, the assessee is now before this Tribunal (ITAT) and has raised the follo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the learned AO / TPO in so far as rejection of Hartron Communication Limited is concerned without ascribing any reasons thereto, thereby passing a non speaking order and vitiating the principles of natural justice. 6. The Hon ble CIT (A) has erred, in upholding the entire Adjustment made by the learned AO/ TPO, even after excluding two companies from the final set of comparable to benchmark the said transaction. 7. the Hon ble CIT (A) has erred in including companies which were rejected on account of functional dissimilarity in immediately preceding assessment year for benchmarking the said transaction, thereby adopting an inconsistent approach and rendering the said analysis defective. 8. the Hon ble CIT (A) / AO has erred, in assuming that the Appellant should have earned an operating margin of 21.63 percent (OP/OC) from uncontrolled transactions, thereby exceeding his jurisdiction and acting in contravention of law. 9. the Hon ble CIT(A) / AO has erred in not making appropriate adjustments to account for differences in working capital employed by the Appellant vis-a-vis the comparables. 10. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t a service company was incorrect. iii) Hartron Communication Limited It was submitted that this also was a comparable selected by the assessee but had been excluded by the TPO without assigning any specific reason for rejection. It was also submitted that the Ld. Commissioner of Income Tax (Appeals) had also excluded the company but had not given any specific finding while rejecting this comparable. iv) Himachal Futuristics Communication Limited It was submitted by the Ld. AR that this company was also selected by the assessee but had been excluded by the TPO and the findings of the TPO had been upheld by the Ld. Commissioner of Income Tax (Appeals) by holding that this company was engaged in the manufacturing of telecom equipment and hence not comparable. It was submitted by the Ld. AR that this company had been held to be a comparable in assessee s case by the Ld. Disputes Resolution Panel (DRP) in assessment year 2007-08. v) Powerplant Performance Improvement Limited It was submitted by the Ld. AR that this was also a comparable selected by the assessee but had been exclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee and the TPO had only fine tuned the search process. It was also submitted that the assessee had not disputed the search criteria adopted by the department as was very much evident from the combined reading of the order of the TPO as well as the Assessing Officer. It was further submitted that the assessee had used multiple year data which was now not permissible as per the settled judicial precedent. The Ld. Sr. DR vehemently argued that the assessee should not be allowed to cherry pick the comparables which would suit its purpose to justify the assessee s stand that the transactions were at Arm s Length Price. 5.0 On a query from the Bench, both the parties fairly agreed that to give a fair chance to the assessee all the comparables could be restored to the file of the Ld. Commissioner of Income Tax (Appeals) to re-consider the issues as the Ld. Commissioner of Income Tax (Appeals) had not considered the objections/submissions of the assessee on a number of comparables and had also passed a non-speaking order in respect of some of the comparables. 5.1 Both the parties also agreed that the issue of working capital adjustment as contested b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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