Tax Management India. Com
                        Law and Practice: A Digital eBook ...

Category of Documents

TMI - Tax Management India. Com
Case Laws Acts Notifications Circulars Classification Forms Manuals SMS News Articles
Highlights
D. Forum
What's New

Share:      

        Home        
 

TMI Blog

Home List
← Previous Next →

2019 (12) TMI 150

..... t only concerns having export activity atleast to the extent of 75% should be selected. Thus out of 09 concerns which were selected by assessee as a part of additional evidence, 05 concerns were held to be as not comparable. The assessee was engaged in export of 100% of its software / data to its AE for year under consideration. The assessee had selected TNMM method as the most appropriate method and applied PLI of OP over OC. In the TP study report, the assessee had used weighted margins of the comparables; however the TPO applied only the margins of the contemporaneous period. As against 14 concerns selected by the assessee, the TPO applied updated margins and also additional filters and finally selected 04 concerns as comparables. The assessee applying the additional filters of the TPO i.e. not considering persistent loss making concerns and concerns having high turnover and applying RPT filter of 25%, selected 09 comparables as additional evidence. The mean margins of the comparables was 12.8% as against the margin of the assessee at 9.90%. In the said list, the concern at serial no. 7, Allsec Technologies India Limited is selected by AO / DRP and there is no dispute. As far as .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... sed by the assessee in this appeal are partly allowed. - ITA No.4343/Del/2014 - 29-11-2019 - Ms. Sushma Chowla, Judicial Member And Dr.B.R.R. Kumar, Accountant Member For the Appellant : Sh. Neeraj Jain, Adv, Sh. Abhishek Aggarwal, Adv, C.A For the Respondent : Sh. H.K. Choudhary, CIT DR ORDER PER SUSHMA CHOWLA, JM: The appeal filed by assessee is against order of Assessing Officer, New Delhi, dated 29.05.2014 relating to assessment year 2006-07 passed under section 254 r.w.s. 143(3) of the Income-tax Act, 1961 (in short Act ). 2. The assessee has raised following grounds of appeal:- 1. That the assessing officer erred on facts and in law in completing assessment under section 143(3)/ 144C read with section 254 of the Income-tax Act (the Act) at an income of ₹ 1,15,57,890 as against the returned income of ₹ 3,417. 2. That the assessing officer / TPO erred on facts and in law in making an addition of ₹ 1,15,57,886 allegedly on account of difference in the arm s length price of the international transactions' of provision of BPO / ITES services to the associated enterprise on the basis of the order passed under section 92CA(3) of the Act by the TPO. 2.1 That the .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... g a low-risk-bearing captive service provider as opposed to the comparable companies who were independent ITES service provider, even while holding that the assessee cannot be compared to a risk free entity . 6. Without prejudice that the assessing officer erred on facts and in law in not appreciating that the income of the appellant being exempt under section 10A of the Income-tax Act, 1961 ("the Act ), there could be no motive to divert any part of its profit to the foreign enterprise 7. That the assessing officer erred on facts and in law in levying interest under Section 234B of the Act. 8. That the assessing officer erred on facts and in law in initiating penalty proceedings under Section 271(1)(c) of the Act. The appellant craves leave to add, alter, amend or vary from the aforesaid grounds of appeal before or at the time of hearing. 3. Briefly in the facts of the case, the assessee had furnished the return of income declaring income of ₹ 3417/-. The case of the assessee was taken up for scrutiny and draft assessment order was passed on 17.12.2009 proposing an adjustment of ₹ 3.26 Crores. The assessee filed objections before the DRP which rejected the same an .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... transaction at ₹ 23.94 Crores as against 20.71 Crores shown by the assessee and proposed an adjustment of ₹ 3.22 Crores. Before the DRP vide letter dated 16.11.2011, the assessee had filed an application for admission of additional evidence. Consequent to the directions of the Tribunal , the DRP applies revised filter of the export turnover to the extent of 75% and rejected the concerns which did not fulfill the said filter and gave directions to the AO in this regard. The AO in the final assessment order in turn relying on the directions of the DRP made the following observations. The AO notes vide para 6 at page 4 of the assessment order that the assessee had conducted fresh search for comparables as the said comparables did not figure in accept / reject matrix. The AO also notes that the search for comparables had taken place after the TPO had passed the order and only during the set aside proceedings before the DRP, the assessee had filed fresh set of comparables. The AO observed that the data was not contemporaneous data as envisaged under section 92F (iv) of the Act. Further Rule 10D(4) mandated that the data used for benchmarking the arm s length price should be .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... d adjustment of ₹ 2.66 Crores was made in the hands of the assessee. He pointed out that the Tribunal in the second round had directed the DRP to consider the application filed by the assessee for admission of additional evidence, which in turn was filed in the first round itself. The learned AR for the assessee referred to the list of comparables which were finally selected by assessee adopting the same filters as applied by the TPO. However, the DRP in the third round applied new filter, wherein the filter of the concerns having less than 75% turnover were excluded. In this regard 05 concerns were rejected as not being comparable. The learned AR for the assessee also pointed out that the TPO held Eureka Outsourcing Solutions Pvt. Ltd., to be persistent loss making concern and did not apply the margin of the said concern. However in the list wherein the names of the comparables were mentioned, the said concern was shown as not persistent loss making concern. In respect of exclusion of Maple Esolutions Ltd. and Informed Technologies Pvt. Ltd., by the AO / DRP / TPO, learned AR for the assessee says that it had no objections. The learned AR for the assessee further submitted t .....

X X X X X X X

Full Text of the Document

X X X X X X X

..... at only concerns having export activity atleast to the extent of 75% should be selected. Thus out of 09 concerns which were selected by assessee as a part of additional evidence, 05 concerns were held to be as not comparable. 9. The assessee was engaged in export of 100% of its software / data to its AE for year under consideration. The assessee had selected TNMM method as the most appropriate method and applied PLI of OP over OC. In the TP study report, the assessee had used weighted margins of the comparables; however the TPO applied only the margins of the contemporaneous period. As against 14 concerns selected by the assessee, the TPO applied updated margins and also additional filters and finally selected 04 concerns as comparables. The assessee applying the additional filters of the TPO i.e. not considering persistent loss making concerns and concerns having high turnover and applying RPT filter of 25%, selected 09 comparables as additional evidence. The list of 09 comparables reads as under:- S. No. Company Name Finance Year Sales OP/ TC 1. Surevin Internet Services Ltd. 200603 1.01 3.06% 2. E-Nxt Financials Ltd. 200603 5.56 2.54% 3. Cosmic Global Ltd. 200603 3.11 16.48% 4. .....

X X X X X X X

Full Text of the Document

X X X X X X X

 

 

← Previous Next →

 

 

|| Home || About us || Feedback || Contact us || Disclaimer || Terms of Use || Privacy Policy || Database || Members || Refer Us ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.
|| Blog || Site Map - Recent || Site Map ||