TaxTMI 
TaxTMI 
2016 (5) TMI 1183
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....es like corporate treasury, financial reporting and taxation services etc. to Siemens AG and its group companies, filed its return of income on 29.9.2009,declaring total income of Rs. 1.25 crores. The effective Ground of appeal is about making an addition of Rs. 63.88 lakhs under the provisions of Chapter- X of the Act. During the assessment proceedings, the AO found that the assessee-company had entered into international transactions. For determining the Arm's Length Price(ALP)of those transactions, he made a reference to the Transfer Pricing Officer(TPO).The TPO observed that the assessee had reported the international transaction with Associated Enterprises (AE.s) as under:- SN. Description of International Transaction Amou....
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....c mean of 10.24%, that the assessee fell within +/- 5% range, that transaction was at arm's length. After considering the TP report, the TPO held that the assessee had used multiple year data in a mechanical manner without giving justification or demonstration of the influence of data relating to years prior to the year in which the international transaction were carried out, that it had not considered data for FY.2008-09 in respect of two out of the six companies, that it had not satisfied in condition provided in Rule-10(4) of the income tax Rules, 1962(Rules), that the use of multiple year data was not justified . Accordingly, he directed the assessee to give the margin after considering the account for the FY 2008-09.The assessee....
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....ved that the assessee had not demonstrated what were the difference in the working capital of the assessee and that of comparables which would have a bearing on the profit and operating profit, that it had not demonstrated as to what were the risks undertaken by each of the comparable companies, that it had also not quantified the risk undertaken by them with reference to factual particulars or financial data. 3. Aggrieved by the order of the TPO and draft order of the AO, the assessee filed objections before the Dispute Resolution Panel(DRP).Before it, the assessee stated that the TPO had disregarded search comparable undertaken by it, that out of six comparables five comparables were rejected as functionally non comparables, that only ....
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....y could have serious issues of continuity and survival. Accordingly, the DRP issued directions to the AO. 4. During the course of hearing before us, the authorised representative(AR)contended that the TPO had wrongly rejected the five comparables, that it had included CCSPL for making the TP adjustment, that if ICRA was included as comparable it would be within the permissible limit of +/-5%, that suffering of loss by ICRA should not result in exclusion of the company from comparable, that the TPO himself had included the result of ICRA while deciding the TP issues for earlier and subsequent year. He referred to the cases of Goldman Sachs (India) Securities Pvt. Ltd.(Income Tax Appeal No.2222 of 2013 dt.4.4.2016).The Departmental Represe....
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.... TPO and the DRP had excluded ICRA for determining ALP, as it had suffered loss during the year under consideration. But, for the subsequent and the earlier years the TPO himself had used the data of ICRA for determining the results. In our opinion, for determining ALP what is to be seen is the similarities of functions of the comparables not the commercial results. Profit and loss are the two sides of the same coin. So, if an assessee had suffered loss during a particular year it should not be excluded from the comparables' list. If ICRA was a good comparable in earlier and subsequent years because of the functional similarity it should have been included for arriving at ALP of the transaction. Here, it would be appropriate to refer to....
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....by the impugned order held on a finding of fact that for the Assessment Year 2005- 06 - Capital Trust Ltd. has made a profit although it made a loss for the subsequent two years namely Assessment Year 2006-07 and 2007-08. However the impugned order of the Tribunal inter alia relies upon its order in the case of Brigade Global v. ITO No. 1494/Hyd./2010 rendered by the company-ordinate Bench at Hyderabad - wherein it is held that only persistently loss making unit cannot be said as comparable. In this case, the impugned order holds on facts that Capital Trust Ltd. it is not a persistent loss making unit. Therefore, Capital trust Ltd. is comparable In our opinion, if the TPO himself had included ICRA as a comparable in earlier and subsequen....