TaxTMI 
TaxTMI 
2015 (9) TMI 1170
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....led by the assessee in supersession of the grounds taken in appeal memo. Apart from that, the assessee has also filed certain additional grounds. Some of the grounds were not pressed. We will deal with the surviving issues one by one. 3. The first issue pressed by the ld. AR is against the alleged calculation mistake committed by the Transfer Pricing Officer (TPO) in computing the profit margin of two comparable companies, namely, M/s Educational Consultants (India) Ltd. (Technical Assistance segment) and M/s Agricultural Finance Corporation Ltd. 4. Briefly stated, the facts of the case are that the assessee, a wholly owned subsidiary of the Corporate Executive Board Company, USA, was incorporated in India on 4.3.2004. The assessee is....
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....emanate from the figures taken from the Annual accounts of this company. On being called upon to invite our attention towards calculation of such percentage of profit rate by the TPO with reference to the relevant figures from the Annual accounts of M/s Educational Consultants (India) Ltd. (Technical Assistance segment), the ld. AR put forth that no such figures are available in the TPO's order. The ld. DR also failed to draw our attention towards the figures of this company in the order of the TPO resulting into the determination of OP/TC at 26.45%. When there is a specific challenge to the calculation of OP/TC of the relevant segment of this company and the TPO has not mentioned how he determined this percentage of profit, we are helpless....
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....nst consideration by the TPO of deferred revenue expenditure as operating expense in the computation of the assessee's own operating profit rate. The ld. AR contended that the assessee incurred a sum of Rs. 71.89 lac in the preceding year before the start of actual business activity, which amount was capitalized as deferred revenue expenditure, to be written off in five years. He submitted that 20% of such expenditure was written off in the preceding year by way of a debit to the Profit & Loss Account and equal amount of Rs. 14.37 lac was debited to the Profit & Loss Account for the current year. The ld. AR pointed out that the TPO, while computing operating profit margin of the assessee for the year in question, treated this sum of Rs. 14.....
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....0.78 lac, Depreciation of Rs. 2.41 lac. All the expenses in this list are otherwise of operating nature, except Preliminary expenses amounting to Rs. 25,498/-, which full amount has been treated by the TPO himself as non-operating. The ld. AR argued that such expenses were incurred prior to the rendering of services to the AE and hence should not have been considered as operating expenses in the computation of operating profit margin of the current year. On a specific query from the Bench, it was admitted that the assessee was engaged in rendering services only to its AE and none else. It is also an admitted position that the assessee started rendering services to its AE from 1st January, 2005. The relevant criteria in this regard is the na....
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....ses with the year in which corresponding revenue is received from the AE. If the revenue arising from incurring of such expenses is linked with the preceding year, then the claim of such expenses by way of write off made during the year, cannot be considered as operating cost of the current year. If on the other hand, the revenue from incurring of such expenses is linked with and accounted for in the instant year, then the corresponding amount of expenses, irrespective of the amount of deduction claimed by the assessee at 20%, will have to be treated as operating expense. Coming back to the facts of the instant case, we find that neither the dates of incurring such revenue expenses, though capitalized as deferred revenue expenditure, are av....
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....her issue which survives in this appeal is against the treatment of M/s Artefacts Software and Finance Ltd. as a comparable company. The facts of this issue are that this company was included by the assessee in its list of comparables, which was accepted by the TPO. The ld. AR now contends that the related party transactions of this company are more than 50% and, hence, it ceases to be comparable. In the opposition, the ld. DR raised an objection to this argument by contending that since the assessee itself had chosen this company as comparable, now it cannot resile from its original stand. 13. Having heard the rival submissions and perused the relevant material on record, we are unable to countenance the preliminary objection raised by ....