TaxTMI 
TaxTMI 
2019 (8) TMI 403
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.... applicability of decision of Tribunal dated 24/02/2012 rendered in the case of M/s Frost & Sullivan (I) Pvt. Ltd. In the above background the appeal has come up for fresh hearing before the bench. 2. At the outset, the observations / directions of Hon'ble Court could be extracted in the following manner: - 1. This Appeal under Section 260-A of the Income Tax Act. 1961 (the Act), challenges the order dated 12th April, 2013 passed by the Income Tax Appellate Tribunal (the Tribunal) for the Assessment Year 2004-05. 2. At the hearing, Appellant urges only the following question of law, for our consideration: - Whether on the facts and in the circumstances of the case and in law, nonconsideration of submissions of the Appellate, the precedents cited by the Appellant and non-consideration of relevant factors has rendered the impugned order perverse?". 3. On consideration, we admit the appeal on the aforesaid question as it gives rise to a substantial question of law. 4. At the request of the Counsel, the appeal itself is taken up for final disposal as a scope of the dispute lies in a very narrow compass. 5 The Appellant is engaged....
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.... the order dated 12th April, 2013 of the Tribunal. 10. The grievance of the Appellant is that even when the issue arising for consideration before the Tribunal was concluded in its favour, the decision of the Tribunal in ACIT v/s. M/s. Frost & Sullivan (I) Pvt. Ltd. decided on 24th February, 2012 was not followed even when it carries out the same activity as the Appellant. In the case of M/s. Frost & Sullivan (supra), the same TPO had on 13th December, 2006 (same date on which the TPO passed an order in the Appellant's case) had determined its margin at 20.42% in respect of 102 selected companies as comparable which again were identical to' the comparable selected in the case of Appellant. This was evident from the Annexure-I to the TPO order produced by the Revenue at the hearing before the Tribunal. 11. The Appellant specifically relied upon the identical observations found in the orders of the TPO dated 13th December, 2006 in ease of M/s. Frost & Sullivan (supra) and in that of the Appellant's. The observations as extracted by the Tribunal in the case of M/s. Frost & Sullivan (supra) reads as under:- " .... .... ... .. By taking co....
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....e done unless there was some good cause for not following a decision of a Co-ordinate Bench on the same issue. The cause, if any, should be reflected in the impugned order passed by the Tribunal. Merely stating that the issue of comparable is factual in nature and cannot be applied as a matter of general principle would not be sufficient to distinguish the reliance placed by the Appellant on the Tribunal's decision in M/s. Frost & Sullivan (supra). However, when according to the Tribunal, the facts are different in the case relied upon, it should be pointed out in the impugned order and not ignored on the basis of generality. The facts as demonstrated by the Appellant is that both in case of M/s. Frost & Sullivan (supra) and that of the Appellant, prima facie, appear to be identical. 14 In the above circumstances, the Tribunal in the impugned order ought to have considered the decision of the Tribunal in the case of M/s. Frost & Sullivan (supra) in some greater detail pointing out the distinctions before coming to the conclusion that the same cannot be applied in the case of the Appellant. The Tribunal on consideration of the facts pointed out by the Appellant could mo....
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....sultancy, business research and analytics, business process outsourcing companies etc. [Ref.Pg.21] Pg.41 of PB 3. Operating Profit/Total cost ratio adopted by TPO 20.42 percent [Ref.Pg-15] Pg.16 of PB 20.42 percent [Ref.Pg-21] Pg.41 of PB 4. Date of TPO's order 13th December, 2006 [Ref.Sr.No.5 of the paper book] 13th December, 2006 [Ref.Sr.No.9 Pg. 48 of the paper book] 5. Assessment Year A.Y.2004-05 [Ref.Pg.1] Pg-2 of Paper book A.Y.2004-05 [Ref.Pg.1] Pg-40 of Paper book 3.2 The attention has specifically drawn to the facts that same TPO passed similar order for same Assessment Year on same date in the case of two different assessees having similar functional profile. The first appellate authority, in both the cases, deleted the Transfer Pricing Adjustment. One of the factors that led to deletion of adjustment in assessee's case, as evident from para 7.1 of the impugned order, was that Annexure-1 of Ld. TPO's order containing details of comparable entities, was never furnished to the assessee and the additions were made in a cavalier manner. Similar was the observation of Ld. first appellate authority in the case of M/s Frost & Sullivan (I....
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.... has given the list of 149 companies as samples according to which, the average GP /TC comes to 28.23%. We find the TPO after excluding 47 more companies as loss making companies and holding the same as functionally different from assessee company determined the OP/ TC at 20.42%. While doing so, the TPO has excluded the loss-making companies. He, however, has not excluded the profitmaking companies. We find the AO has considered companies with huge turnover as comparables. For example, as against the total turnover of 10.82 crores by the assessee (Export turnover of Rs. 7.30 crores and Domestic turnover of Rs. 3.53 crores) the comparison taken by the TPO includes companies whose turnover are as follows: - COMPANIES AMOUNT (IN CRORES) Tata Sons Ltd. Rs. 5869.39 Sonata Information Technology Ltd. Rs. 141.79 Larsen & Tourbo Infotech Ltd. Rs. 364.61 Tata Technologies Ltd. Rs. 131.21 Birlasoft Ltd. Rs. 168.90 Polaris Software Lab Ltd. Rs. 578.49 Wipro Ltd. Rs. 5132.70 Digital Global soft Ltd. Rs. 628.09 Infosys Technologis Ltd. Rs. 4760.90 I-Flex Solutions Ltd. Rs. 684.46 Satyam Computer Services Ltd. Rs. 2541.54 ....