Tribunal remits matter for reconsideration of exclusion of M/s Cosmic Global Ltd

The Tribunal partially allowed the appeal, remitting the matter back to the TPO/AO for reconsideration of the exclusion of M/s Cosmic Global Ltd. The Tribunal found merit in the appellant's argument based on a previous Tribunal order and directed a reevaluation, citing the exclusion of the entity in a prior case for statistical purposes.

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Issues:
Transfer-pricing adjustment for AY 2009-10, exclusion of M/s Cosmic Global Ltd. from comparable entities.

Analysis:
1. The appellant contested the Transfer-pricing adjustment for AY 2009-10. The final assessment order was issued by the Assessing Officer (AO) on 28.02.2014 under relevant sections of the Act based on the directions of the Dispute Resolution Panel, Chennai (DRP) dated 20.12.2013.

2. The main contention revolved around the exclusion of M/s Cosmic Global Ltd. from the set of comparable entities used by the Transfer Pricing Officer (TPO). The appellant relied on a previous Tribunal order for AY 2010-11 to support their argument for exclusion. The CITDR argued for the inclusion of M/s Cosmic Global Ltd. in the comparable entities.

3. The appellant, a resident corporate assessee providing publication solutions, had international transactions with Associated Enterprises (AE) benchmarked using the Transactional Net Margin Method (TNMM). Initially, the appellant's margin was 11.18%, compared to 8.84% of comparable entities. After updating margins based on 2008-09 data, the appellant's margin was 10%, while the selected comparable entities had a mean margin of 26.05%, including M/s Cosmic Global Ltd. The TPO made an adjustment of Rs.1845.78 Lacs, later revised to Rs.656.08 Lacs.

4. The DRP directed the exclusion of one entity but retained M/s Cosmic Global Ltd., leading to a TP adjustment of Rs.312.73 Lacs in the final assessment order. The appellant appealed for the exclusion of M/s Cosmic Global Ltd., citing a previous Tribunal order where the entity was excluded upon appeal.

5. Upon reviewing the previous Tribunal order for AY 2010-11, where M/s Cosmic Global Ltd. was excluded, the current Tribunal remitted the matter back to the TPO/AO for reevaluation. The Tribunal found merit in the appellant's argument and followed the precedent set in the previous case, partially allowing the appeal for statistical purposes.

6. The Tribunal's decision on 31st January 2022 partially allowed the appeal for statistical purposes, remitting the matter back to the TPO/AO for reconsideration of the exclusion of M/s Cosmic Global Ltd.

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