2015 (3) TMI 14

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....lowed the assessee's appeals. The question of law urged in this case is:  "Whether the ITAT fell into error in directing inclusion of data and particulars pertaining to Cyber Media Events Limited in the transfer pricing studies, to determine arm's length price (ALP) for the purpose of income tax." 2. The assessee is engaged in installation, maintenance, repairing, sales and supply of plant, equipment and apparatus for the purpose of communication of all kinds. It also provides marketing and after sales services to Nortel Group of Companies. As it was obliged to, the assessee submitted a Transfer Pricing Report (TPR) for A.Y. 2007-08 and 2008-09. The Transfer Pricing Officer (TPO) accepted the ALP of all international transactions....

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....roached the DRP. The DRP accepted the TPO's reasoning that the segment turnover of the excluded company, i.e. M/s. Capital Trust Ltd. was only `25 lakhs and constituted less than 2% of the total turnover of the company and, therefore, the assessee could not use its data. The DRP concurred with the view of the TPO and held as follows: "Thus the TPO held that Capital Trust Ltd. is not a comparable company. We are in agreement with the TPO. We decline to interfere and hold that the Capital Trust Ltd. is not a comparable company, because its revenue from "Foreign Consultancy" (not from Marketing & Sales Support Service) is only Rs. 25 lacs. Though we agree that in service industry turnover as such does not play significant role and normally the....

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....ntions and perused the material available on record. Apropos Capital Trust comparable, the TPO has observed that primary business of this company is automobiles sales and service. We are of the considered view that a company cannot be excluded from the comparables merely for the reason of having low turnover. It is to be appreciated that no turnover filter was applied by either of the parties. The comparable has been excluded because the total turnover of this comparable is Rs. 13.92 crores. The analysis needs to be carried out on the basis of functional profile and not on an arbitrary or adhoc criteria. From the facts on record and argument advanced before us, it emerges that the functional profile of Capital Trust Limited's consultancy....