Exclusion of four comparables upheld in transfer pricing case over unavailable segmental data and dissimilar KPO services

HC upheld the Tribunal's exclusion of four comparables from the assessee's TP analysis, concluding the Tribunal made factual findings that segmental data was unavailable for three comparables and that the fourth provided KPO-type services dissimilar to the assessee's software development business. Because the Tribunal examined and recorded these factual determinations, HC declined to interfere with the impugned order, leaving the Tribunal's adjustments and exclusions intact.

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Issues Involved:
1. Application for condonation of delay in re-filing the appeal.
2. Challenge to the order passed by the Income Tax Appellate Tribunal regarding exclusion of comparables for Assessment Year 2008-09.

Issue 1: Application for Condonation of Delay:
An application was filed by the appellant seeking condonation of a 258-day delay in re-filing the appeal. The respondent did not oppose the application, and the delay was condoned. The application was disposed of accordingly.

Issue 2: Challenge to ITAT Order on Exclusion of Comparables:
The appeal by the appellant/revenue was against the ITAT order dated 23.05.2018 for Assessment Year 2008-09. The ITAT had dealt with cross-appeals from both the appellant/revenue and the respondent/assessee. The appellant's appeal was specifically related to AY 2008-09. The respondent had sought the exclusion of nine comparables, out of which the ITAT directed the exclusion of eight, except for Softsol.

The appellant's challenge was focused on the exclusion of four comparables: Avani, Wipro, E-Zest, and Persistent. The appellant argued that the Tribunal's approach was unsustainable, while the respondent supported the findings of fact by the Tribunal.

Upon examination, it was found that the Tribunal had excluded Avani, Wipro, and Persistent due to the unavailability of segmental data. The appellant contended that the respondent had accepted Persistent as a comparable before the TPO, and the objection was raised for the first time before the Tribunal. However, the Court held that the Tribunal, being the final fact-finding authority, had examined the matter and decided on the exclusion based on the lack of segmental data.

Regarding E-Zest, the Tribunal found that it provided services falling under Knowledge Process Outsourcing (KPO), which differed from the respondent's business. The Tribunal concluded that E-Zest should be excluded as a comparable.

Ultimately, the Court declined to interfere with the ITAT order, stating that no substantial question of law arose for consideration. The appeal was closed, and parties were directed to act based on the digitally signed copy of the judgment.

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