Tribunal directs fresh adjudication on comparables for Transfer Pricing. Verify tax credit & interest levy. Exclude if functional dissimilarities.

The Tribunal partly allowed the appeal, directing fresh adjudication on the inclusion of Universal Print Systems Limited (UPS) and BNR Udyog Ltd. as comparables for Transfer Pricing purposes. It also instructed verification of the short credit of taxes paid and the consequential levy of interest under Section 234A. UPS may be excluded if adjustments cannot be accurately made, considering functional dissimilarities, while BNR Udyog Ltd. should be excluded if it fails the functionality test due to differences in services provided compared to the assessee.

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Issues Involved:
1. Transfer Pricing (TP) Grounds
2. Corporate Tax Grounds

Summary:

Transfer Pricing (TP) Grounds:

1. Inclusion of Universal Print Systems Limited (UPS) as a Comparable:
- The Tribunal remanded the issue of including UPS as a comparable to the Transfer Pricing Officer (TPO) for fresh adjudication. The Tribunal noted that UPS is functionally dissimilar to the assessee, primarily engaged in providing integrated print solutions rather than routine ITES services. The Tribunal directed the TPO to consider segmental data and apply filters at the segmental level, as per Rule 10B of the Income-tax Rules. The TPO was also instructed to use powers under Section 133(6) of the Act to gather required details from UPS. The Tribunal emphasized that if adjustments cannot be reasonably or accurately made, UPS should be excluded from the list of comparables.

2. Inclusion of BNR Udyog Ltd. as a Comparable:
- The Tribunal remanded the issue of including BNR Udyog Ltd. as a comparable to the TPO. The Tribunal observed that the company is engaged in medical transcription, which is considered back-office services and not high-end KPO services. The Tribunal directed the TPO to reconsider the functional similarity and segmental data of BNR Udyog Ltd. The Tribunal also noted that if segmental information is available, filters should be applied at the segmental level. The Tribunal directed the AO/TPO to exclude BNR Udyog Ltd. if it fails the functionality test, as the assessee is engaged in trading, distribution of laboratory products and chemicals, strategy sourcing, and ITES.

Corporate Tax Grounds:

1. Levy of Interest under Section 234A:
- The Tribunal noted that the levy of interest under Section 234A is consequential.

2. Short Credit of Taxes Paid:
- The Tribunal directed the AO to verify the assessee's claim of short credit of taxes paid amounting to INR 53,79,565 and to give credit of taxes in accordance with the law.

Conclusion:
The appeal by the assessee was partly allowed, with directions for fresh adjudication on the inclusion of UPS and BNR Udyog Ltd. as comparables, verification of short credit of taxes paid, and consequential levy of interest under Section 234A.

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