Court affirms exclusion of ICRA Online, admits analysis on Machine Tools India, dismisses UPS depreciation rate.

The Court upheld the direction to exclude ICRA Online Ltd. as a comparable in a transfer pricing study, citing the validity of using post-facto information for exclusions. The issue of including Machine Tools India Ltd. as a comparable was admitted for further analysis. The Court dismissed the question regarding depreciation on UPS at a rate of 60%, referencing a previous decision that settled the matter against the Revenue.

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Issues:
1. Exclusion of ICRA Online Ltd. from comparables
2. Inclusion of Machine Tools India Ltd. as a comparable
3. Depreciation on UPS at the rate of 60%

Issue 1: Exclusion of ICRA Online Ltd. from comparables
The respondent assessee initially considered ICRA Online Ltd. as a comparable in its transfer pricing study. However, during a fresh search, it found information in the Director's report of ICRA Online Ltd. dated 12th May, 2007, which led to the exclusion of ICRA Online Ltd. as a comparable. The Transfer Pricing Officer (TPO) did not accept this exclusion, resulting in a draft Assessment Order. The Dispute Resolution Panel (DRP) rejected the assessee's application, upholding the draft order. The Tribunal, considering the new information, directed the Assessing Officer to exclude ICRA Online Ltd. as a comparable, citing a Special Bench decision to support the assessee's right to challenge the comparability. The Revenue argued that the exclusion based on post-facto information was not valid under Rule 10-D(4) of the Income Tax Rules, 1962. However, the Court found that the information used for exclusion was available before the due date specified in the Act, making the direction to exclude ICRA Online Ltd. valid. Therefore, the Court dismissed the appeal on this issue.

Issue 2: Inclusion of Machine Tools India Ltd. as a comparable
This issue was not extensively discussed in the judgment. The Court admitted the appeal on this question, indicating that further analysis and arguments would be required to determine the validity of including Machine Tools India Ltd. as a comparable. No specific reasons or arguments were provided in the judgment regarding this issue.

Issue 3: Depreciation on UPS at the rate of 60%
The Court noted that the issue of allowing depreciation on UPS at the rate of 60% had already been settled against the Revenue in a previous decision. Referring to the decision in CIT vs. M/s. Saraswat Infotech Limited, the Court concluded that this issue did not raise any substantial question of law. Therefore, the Court did not entertain this question further.

In conclusion, the judgment primarily focused on the exclusion of ICRA Online Ltd. as a comparable in the transfer pricing study, emphasizing the validity of using post-facto information for such exclusions. The issues related to the inclusion of Machine Tools India Ltd. and depreciation on UPS were briefly mentioned, with the former being admitted for further consideration and the latter being dismissed based on a previous decision.

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