TMI Blog2018 (6) TMI 1707X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be treated as non-operating in nature even in the case of comparables. See B.C. MANAGEMENT SERVICES PVT. LTD. [ 2017 (12) TMI 255 - DELHI HIGH COURT] Risk adjustment - As relying on STARENT NETWORKS (INDIA) PVT. LTD.[ 2018 (4) TMI 32 - ITAT PUNE] we direct the Assessing Officer to verify the above said claim of assessee and re-compute the margins of assessee and also the mean margins of comparables in line with our directions and determine transfer pricing adjustment, if any, is to be made. The grounds of appeal raised by the assessee are thus, partly allowed. - ITA No.291/PUN/2016 - - - Dated:- 5-6-2018 - MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM For the Appellant : Shri Ketan K. Ved For the Respondent : Shri Rajeev Kumar, CIT ORDER PER SUSHMA CHOWLA, JM The captioned appeal filed by the assessee is against order of Deputy Commissioner of Income Tax, Circle-1(1), Pune, dated 27.01.2016 relating to assessment year 2011-12 passed under section 143(3) r.w.s.144C(13) of the Income-tax Act, 1961 (in short 'the Act') 2. The assessee has raised following grounds of appeal: 1. Transfer Pricing adjustment The learned DC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of learned DRP has erred in law and on the facts and in circumstances of the case in not granting the benefit of +/- 5 percent as per proviso to section 92C(2) of the Act. 9. Initiation of penalty proceedings The learned DCIT erred on the facts and in law in initiating penalty proceedings under section 271(1)(c) of the Act. 10. Levy of interest obligation on account of transfer pricing adjustment. The learned DCIT has erred on the facts and in law by levying interest under section 234B of the Act, on account of the unanticipated adjustment made by the learned TPO. The Appellant pleads that the shortfall in advance tax has resulted in view of the adjustment which has been objected in the grounds above and accordingly is consequential in nature. 11. Each one of the above grounds of appeal is without prejudice to the other. 3. The issue raised in the present appeal is against transfer pricing adjustment made by the Assessing Officer / Dispute Resolution Panel (DRP) / Transfer Pricing Officer (TPO) to the value of international transactions entered into by the assessee at ₹ 3,69,15,740/-. 4. Briefly, in the facts of the case, the assessee was providing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see before us has pointed out that the second issue raised by way of ground of appeal No.4 was against the orders of authorities below in not considering foreign exchange gain as operating income while calculating the PLI of assessee. He further pointed out that the said issue stands covered by series of decisions of the Pune Bench of Tribunal. The learned Authorized Representative for the assessee also pointed out that in case Accentia Technologies Ltd. is excluded and foreign exchange gain is treated as operating revenue, then the margins shown by the assessee were within +/-5% of the mean margins shown by the comparables and no adjustment needs to be made. The learned Authorized Representative for the assessee further pointed out that another issue which is to be decided in the case of assessee is inclusion of the concern C K Management Ltd., which was functionally comparable company. However, the said concern was excluded on the ground that no annual report was provided during transfer pricing assessment proceedings. The assessee points out that the financials of the said concern are available and have been placed at pages 967 to 1001 of Paper Book and functional comparabilit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shown by the assessee were 11.68% as against mean margins of comparables at 23.36% and hence, the TP adjustment in the hands of assessee. The first issue which has been raised by the assessee by way of ground of appeal No.3 is with regard to inclusion of Accentia Technologies Ltd. as comparable. The case of assessee before us is that the said concern is not to be included as comparable since it is engaged in rendering KPO services in healthcare sector. Further, there was an extraordinary event during the year. 14. Similar issue of exclusion of Accentia Technologies Ltd. was raised by the assessee being functionally not comparable in its own case in earlier years and the Tribunal in assessment years 2008-09 to 2010-11 has excluded the said concern as being not functionally comparable to the activities carried on by the assessee. The last finding of the Tribunal in cross appeals filed by the assessee and the Revenue in ITA No.259/PN/2015 and ITA No.579/PN/2015, relating to assessment year 2010-11, order dated 31.05.2016, wherein vide paras 12 to 15, the Tribunal had excluded the said concern as being not comparable. Further, the Hon ble High Court of Delhi in Pr.CIT Vs. B.C. Mana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owing risk adjustment has been deliberated upon by the Tribunal in Starent Networks (India) Pvt. Ltd. Vs. ACIT (2018) 90 taxmann.com 367 (Pune-Trib.), wherein vide paras 34 to 36, it was held as under:- 34. Now, coming to the last issue in respect of economic adjustment on account of risk differences. The case of the assessee is that the assessee being remunerated on cost plus basis where it is providing services to its associated enterprises, it is risk free and adjustment for differences between functional and risk profile of the comparable companies is to be allowed in the hands of assessee. 35. We find that similar issue has been raised in DCIT Vs. Applied Micro Circuits India Pvt. Ltd. in ITA No.1250/PUN/2015 along with CO No.43/PUN/2017, relating to assessment year 2010-11, order dated 24.11.2017, wherein it was held as under:- 18. The next issue raised vide ground of objection No.2.2 is against the claim of risk adjustment. The plea of assessee that risk adjustment should have been granted to the assessee for differences between functional and risk profile of comparable companies vis- -vis assessee. The learned Authorized Representative for the assessee in this re ..... 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