TaxTMI 
TaxTMI 
2019 (4) TMI 1298
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....ansfer pricing adjustment. 6. Brief facts relating to this issue are, the assessee, an Indian company, is a wholly owned subsidiary of Travelex Plc, U.K. and is part of Travelex Group. The assessee provides Information Technology Enabled Services (ITES) to its overseas Associated Enterprise (AE). In its transfer pricing study, the assessee benchmarked the price charged for provision of ITES to the AEs by selecting Transactional Net Margin Method (TNMM) as the most appropriate method with operating profit/total cost (OP/TC) as the profit level indicator (PLI). By undertaking a search in the databases assessee selected 20 companies as comparables with arithmetic mean of 9.93%. Since, the margin shown by the assessee at 16.04% was higher than the mean margin of the comparable companies, the assessee claimed the price charged to the AE to be at arm's length. The Transfer Pricing Officer, however, did not accept the claim of the assessee. After verifying the transfer pricing study report, the Transfer Pricing Officer observed that the search process adopted by the assessee to select comparables is not reliable. Therefore, rejecting the transfer pricing study report of the assesse....
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....record in the light of the decisions cited before us. Insofar as Vishal Information Technologies Ltd. is concerned, from the facts and material available on record, it is noticed that the business model of the company is totally different from the assessee, as, it does not undertake the work itself but outsources it to third party vendors. This fact is clearly discernible from the low employee cost of the company which is evident from the financial statements filed in the paperbook. Considering the aforesaid aspect, the Hon'ble Delhi High Court in Ramp Green Solutions Pvt. Ltd. v/s CIT, [2015] 377 ITR 533 (Del.), has held that this company cannot be treated as comparable to other companies. Similar view has been expressed in various other decisions of not only different High Courts but different Benches of the Tribunal as submitted in the legal paperbook filed before us. That being the case, following the consistent view expressed in the judicial precedents cited before us, we direct the Assessing Officer to exclude this company from the list of comparables. 12. As regards comparability of Maple e-solutions Ltd., it has now been well settled through various judicial precedents t....
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....orking stated that the rate of interest charged was 6.75% per annum. The Transfer Pricing Officer observed, as per a circular issued by the RBI, the external commercial borrowing (ECB) rate of interest for less than six months is LIBOR plus 50 basis points. Accordingly, he restricted the rate of interest to be paid to the AE at 5.50%. As a result, an adjustment of Rs. 4,38,499, was made to the arm's length price of the interest paid. 16. Though, the assessee challenged the aforesaid transfer pricing adjustment before the DRP, however, it was unsuccessful. 17. The learned Authorised Representative submitted, the assessee has computed interest on delayed payment to AEs at LIBOR plus 200 basis points. He submitted, in similar nature of transactions the chargeable interest rate varies between LIBOR plus 200 basis points to LIBOR plus 300 basis points. In support of such contention, learned Authorised Representative relied upon the following decisions:- i) Tricom India Ltd. v/s ITO, ITA no.322/Mum./2014, dated 03.09.2014; and ii) M/s. Fire Star International Pvt. Ltd. v/s CIT, ITA no.488/ Mum./2015, dated 31.07.2015. 18. Thus, he submitted, the rate at whi....
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....loyee has been clearly stated in the auditor's report. Further explaining, the learned Authorised Representative submitted, on investigation by the management it was found that one of the employee, Shri V.S. Praveen, had defalcated an amount of Rs. 15,24,228, from the assessee company. He submitted, this fact was also admitted by the concerned employee. The learned Authorised Representative submitted, though the company could recover an amount of Rs. 4,70,000 from the concerned employee, however, the balance amount of Rs. 10,53,996, could not be recovered from the concerned employee resulting in a loss to the company. He submitted, though the assessee had not lodged any FIR against the concerned employee, however, his services were terminated. The learned Authorised Representative submitted, though the assessee has wrongly claimed the deduction as bad debt, however, it has to be allowed as business loss. 24. The learned Departmental Representative relying upon the observations of the departmental authorities submitted that the assessee has not furnished any evidence to prove that the amount in dispute was embezzled. He submitted, assessee initially claimed the amount as bad debt....