TaxTMI 
TaxTMI 
2016 (10) TMI 1313
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....appropriate method by considering itself as the tested party with operating profit to operating cost (OP/OC) as the profit level indicator (PLI). Assessee had selected eight companies as comparables with average margin of 11.52%. As the assessee's margin at 9.01% is within +/- 5% of the average margin of the comparable companies, the price charged to AE was considered to be at arm's length. The TPO however rejected the TP study of the assessee pointing out various defects/deficiencies. After considering the functionality of the comparables selected by the assessee the TPO rejected most of them and selected the following companies as comparable is with average margin of 14.56%. Particulars Amount (Rs.) Operating Income (A) Rs. 24,06,34,674 Operating cost (B) Rs. 21,54,04,071 Operating profit (C) (As per TP study) Rs. 1,93,99,128 OP/OC (actual) 9.01% Arm's length OP/OC 14.56% Arm's length operating profit (D) = B x 14.54% 3,13,62,832 Adjustment = Rs. 1,41,04,412 3. This resulted in determination of arm's length operating profit of Rs. 3,13,62,832 as against operating profit of Rs. 1,93,99,128 shown by the assessee. The resultant shor....
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....sk Global Centres (I) Pvt. Ltd. v/s ACIT, 43 taxmann.com 100. 6. The learned departmental representative, referring to the annual report of the assessee submitted that assessee's functional profile shows that they are also into similar activities as the comparable. He submitted, unallocable expenses is for the reason that management is for the whole company and some expenditures cannot be identified with particular segment. He submitted, if the TPO has not taken un allocated expenditure some adjustment on that account can be given. He submitted, on-site expenses do not confine to software development and otherwise also expenditure is miniscule. As far as employee cost is concerned he submitted, this contention was never taken by the assessee earlier before the departmental authorities. He therefore submitted, there is no reason to exclude this comparable. 7. We have considered the submissions of the parties and perused the material on record. On a perusal of the annual report of the comparable we have noted that it is engaged in various activities including healthcare, energy and environment solutions etc. Further, the notes on accounts clearly mentions that the company is en....
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....ment years and one of such filter being, company having financial year ending other than 31st March is to be rejected. He submitted quantitative filters may change from year to year, however, qualitative filter cannot be changed. He submitted, this company is having calendar year as its financial year, whereas, assessee's financial year ends on 31st March. He submitted, as per the provisions of rule 10B(4) data relating to the financial year is to be taken. Therefore, as in case of this comparable data for the entire financial year is not available it cannot be treated as a comparable. He submitted, only because the company was included in AY 2009-10, it cannot be included in the impugned assessment year as principle of res judicata doesn't apply to tax proceedings. He further submitted, as the assessee has not objected to this company before the DRP, at this stage assessee should not be permitted to raise the issue other than by way of an additional ground. 10. In the rejoinder ld. authorised representatives submitted, different financial year issue is a legal issue and assessee has raised a specific ground before the ITAT. He submitted, if the assessee can raise such a legal i....
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....2 of 2014 dated 26 September 2016 interpreting rule 10B(4) observed, it obliges that the data that are to be used for comparability analysis should be of the same financial year in which the international transactions were entered into by the tested party. The Hon'ble High Court rejecting the contention of the Department that mandate of rule 10B(4) can be ignored as the difference is only of three months, held that no such liberty can be granted in terms of rule 10B(4) of the rules. Keeping in view the aforesaid decision of the honourable jurisdictional High Court of which neither the assessee nor the department had the benefit of and considering the fact that assessee had not raised the issue before the DRP we are inclined to remit the issue of comparability of this company to the AO/TPO for examining afresh in the light of the relevant judicial precedents and of course after due opportunity of being heard to the assessee. Aditya Birla Minacs Word Wide Ltd. and Tata communication transformation Ltd. 12. As far as these two comparables are concerned, while the TPO rejected Aditya Birla Minacs World Wide Ltd on the reasoning that it fails the related party transaction (RPT) fi....