2015 (9) TMI 1600

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....of the Income Tax Act, 1961 („Act‟) is directed against the order dated 31st October 2014 passed by the Income Tax Appellate Tribunal („ITAT‟) in ITA No. 242/Del/2010 for the Assessment Year („AY‟) 2002-03. 4. The Respondent Assessee is a wholly owned subsidiary of Nokia Corporation, Finland. The Assessee has four distinct business segments. The major segment is Nokia mobile phones sales division or the trading segment. Under this segment, the Assessee acts as a distributor of mobile phones imported from Nokia affiliates throughout India, mainly through third party distributors. Then there is the Nokia Networks Sales Division (NET Sales) which provides technical services in respect of installation of pho....

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....nal set of 60 comparables with OP/TC margin of 19.17%. The TPO explained the steps involved in performing the comparability analysis as under: "a) the database of "Prowess" maintained by Centre for Monitoring Indian Economy was used as the source and the financial year 01-02 was chosen as the reference year; b) all companies engaged in computer software, software development park and software consultancy and development were chosen - 333companies were found; c) the companies which had a net worth below zero were excluded; d) the companies which had sales below Rs. 5 crores were excluded as it was found that companies in the sales range of Rs. 5 crores and below showed steep volatility in their profit results; e) thereafter, those ....

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....mpanies were excluded by holding that the TPO had applied the filter of rejecting the companies falling outside the range of having depreciation to total cost less than 5% and more than 50%. Two other companies were excluded by the CIT (A) on account of existence of significant related party transactions. Lastly, a set of 17 companies were excluded from the comparables on the ground that TPO had applied a lower filter of turnover of less of than Rs. 5 crores, with no upper filter being applied. The CIT (A) granted complete relief to the Assessee in respect of the addition of Rs. 85,20, 942 made by the TPO. 9. In the impugned order dated 31st October 2014, in the appeals filed both by the Assessee and the Revenue, the ITAT did not approve t....

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....ge of total costs and on the basis of sales either less than Rs. 5 crores or more than Rs. 50 crores. 11. It is pointed out by Ms. Suruchi Aggarwal, learned counsel for the Revenue, on the strength of the wording of Rule 10(B) that there was no justification for applying the above two filters when there was no specific mention of any such filter in the rule itself. Further, reliance is placed on the decision of this Court in Chryscapital Investment Advisors (India) Pvt. Ltd. v. Deputy Commissioner of Income Tax (2015) 277 CTR (Del) 137. 12. In reply, it is pointed out by Mr. Vikas Srivastava, learned counsel for the Respondent Assessee, that in this case as has been noted in the order of the CIT (A), the TPO had himself applied the filter....