2018 (4) TMI 1745 - AT - Income Tax

Tribunal rulings on restoration to DRP and exclusion of comparables in IT and ITES segments

M/s. Target Corporation India Pvt. Ltd. Versus DCIT, ACIT, Bangalore

The Tribunal dismissed M.Ps. 314 & 315/Bang/2017 concerning restoration to DRP or AO/TPO due to cryptic directions, citing not all cases require ... Rectification of mistake u/s 254 - contention of the assessee that in view of this clear finding of the Tribunal that the direction of DRP is very cryptic, the matter should have been restored back to the file of DRP and not to file of AO/TPO - HELD THAT:- As relying on IBM India Pvt. Ltd. Vs. Addl. CIT [2013 (12) TMI 1539 - ITAT BANGLORE] there is no apparent mistake in the Tribunal order because the matter was not restored back to the file of DRP but was restored back to the file of AO. Considering these facts along with the entire facts of the present case, we find that there is no apparent mistake in the Tribunal order which can be rectified u/s. 254(2) Comparable selection - Tribunal discussed regarding comparables of ITES segment without giving final finding in respect of IT segment - HELD THAT:- We find that there is apparent mistake in this para of Tribunal order and hence, we rectify the same. Para 13 of impugned Tribunal order should be read as under - 'Learned DR of the revenue could not point out any difference in facts. Therefore, respectfully following these two tribunal orders, we hold that the four comparables i.e. 1) Bodhtree Consulting Ltd., 2) Tata Elxsi Ltd., 3) Persistent Systems Ltd. and 4) Infosys Ltd. in IT segment should be excluded from the final list of comparables of IT segment and in ITES segment, we uphold the exclusion of 1) Accentia Technologies Ltd., 2) Infosys BPO Ltd., 3) Cosmic Global Ltd. and 4) Eclerx Services Ltd. Remaining grounds on TP issues are rejected as not pressed as no argument was advanced on that account.' Issues:1. Rectification of apparent mistakes in the combined Tribunal orders dated 09.06.2017 and 31.08.2017.2. Whether the matter should be restored back to the file of DRP or AO/TPO in case of cryptic directions by DRP.3. Exclusion of comparable companies in IT and ITES segments based on Tribunal orders.Issue 1: Rectification of Apparent MistakesThe assessee filed four M.Ps. claiming apparent mistakes in the combined Tribunal orders. The first two M.Ps. (314 & 315/Bang/2017) were related to the contention that the matter should have been restored back to the file of DRP instead of AO/TPO due to cryptic directions by DRP. The Tribunal referred to a similar case involving IBM India Pvt. Ltd. and held that not all cases require restoration to DRP, thus dismissing M.Ps. 314 & 315/Bang/2017.Issue 2: Restoration to DRP or AO/TPOThe Tribunal clarified that the restoration of matters to the file of AO/TPO after finding DRP directions cryptic does not constitute an apparent mistake in the Tribunal order. Therefore, it held that there was no apparent mistake in the Tribunal order dated 09.06.2017 and dismissed M.Ps. 314 & 315/Bang/2017.Issue 3: Exclusion of Comparable CompaniesThe remaining two M.Ps. (316 & 317/Bang/2017) concerned the exclusion of comparable companies in IT and ITES segments. The Tribunal noted discrepancies in the Tribunal order's findings regarding the exclusion of four comparables in the IT segment. After rectifying the mistake in the order, the Tribunal allowed M.Ps. 316 & 317/Bang/2017, directing the exclusion of certain comparables in the IT and ITES segments based on Tribunal orders.In conclusion, the Tribunal dismissed M.Ps. 314 & 315/Bang/2017 while allowing M.Ps. 316 & 317/Bang/2017, addressing issues related to the restoration of matters to DRP or AO/TPO and the exclusion of comparable companies in IT and ITES segments based on Tribunal orders.