TaxTMI 
TaxTMI 
2018 (11) TMI 121
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....e by the Ld. AO suffers from jurisdictional error as the Ld. AO did not record any reasons in the assessment order based on which he reached the conclusion that it was "expedient and necessary" to refer the matter to the Ld. Transfer Pricing Officer ("TPO") for computation of the arm's length price, as is required under section 92 CA (1) of the Act. 3. That on facts and circumstances of the case and in law, the Ld. AO/ Ld. TPO/ Ld. Dispute Resolution Panel ("DRP") erred in making an adjustment to the arm's length price ("ALP") of the Appellant's international transactions, relating to provision of back office and research related services, with Associated Enterprises ("AEs") amounting to INR 12,283,545 by: 3.1 modifying the comparability analysis conducted in the transfer pricing documentation of the Appellant on inappropriate and inadequate grounds; 3.2 rejecting the applicability of functional filter applied in the search process by the Appellant; 3.3 rejecting Omega Healthcare Management Services Private Limited and Zavata India Private Limited which were comparable to the Appellant, on ground of unavailability of reliable financial information; 3.4 selecting Ecle....
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....to the price shown by the taxpayer in its books of accounts by the TPO. 4. Thus, the TPO directed the Assessing Officer to make an adjustment of Rs. 2,11,23,322/- on account of international transactions. Thereafter, the draft Assessment Order computing the taxable income of the assessee Company at RS.6,20,47,261/- u/s 144C dated 23/2/2015 was forwarded to the assessee. The assessee filed its objection before the Dispute Resolution Panel (DRP). The DRP vide direction dated 8/9/2015 held that the Assessing Officer /TPO shall verify the margins in case of comparables' details and carry out required corrections. The TPO vide office letter dated 15/9/2015 and reminder letter dated 9/10/2015 was requested to pass an order giving effect to the directions of the DRR. The order of the TPO dated 13/10/2015 giving effect to the direction of DRP was sent to the office of the Assessing Officer on 14/10/2015 wherein the following observations was made:- "On the basis of the DRP directions, the arm's length price is recomputed as follows: Operational Cost 17,505,568 ALP at a margin of 26.76% 225,006,057 Price received 212,722,513 105% of the price received 223,358,639 Adjustment u/s 9....
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....igh margin due to the extraordinary circumstances and cannot be compared to the assessee. Hence, the Ld. AR submitted that this comparable should have been excluded by the TPO. The Ld. AR further submits that there appears to be a discrepancy in the revenue as per standalone financial statements and consolidated financial statements depicting the financials of Eclerx Services Ltd. along with its subsidiaries. The Ld. AR relied upon the following case laws:- * Actis Global Services Pvt. Ltd. (Delhi High Court - ITA 417/2016) * Actis Global Services Pvt. Ltd. (Delhi ITAT - ITA No. 6175/Del/2015) * Copal Research India Pvt. Ltd. - Delhi High Court Decision (ITA 894/2015) * Rampgreen Solutions Pvt. Ltd. (ITA 102/2015). 7. The Ld. DR relied upon the order of the TPO and submitted that the TPO has rightly included this comparable. 8. We have heard both the parties and perused all the relevant material available on record. From the Annual Reports, the Ld. AR rightly pointed out that Eclerx Services Ltd. is functionally dissimilar to that of the assessee company. It provides services through two business units i.e. Financial Services and Sales & Marketing Services. Under the ....
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....alysing the comparability of an uncontrolled transaction with an international transaction be the data relating to the FY in which the international transaction has been entered. A different accounting year of a comparable company means that the transactions taking place in a different period are being compared. In this regard, the Ld. AR relied upon the following case laws: * CIT vs. Mckinsey Knowledge Centre India Pvt. Ltd. (ITA 217/2014) * CIT vs. Mercer Consulting (India) Pvt. Ltd. (ITA No. 101 of 2015) 8. The Ld. DR submitted that these comparable have to be verified by the TPO/AO as the database is available. 9. We have heard both the parties and perused all the relevant material available on record. All the three comparables which the Ld. AR submitted to be included as comparables requires a proper verification as the very basis of rejecting the comparables on the ground that the financials were not available seems to be not proper as there is database available in public domain. In fact, quarterly database of the comparable R system is available. Thus, it will be appropriate to remand back this issue for verifying these three comparbles to be included in the fin....