2021 (2) TMI 138

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....itted by a bench of this Court vide order dated 01.04.2019 on the following substantial questions of law: "(i) Whether on the facts and circumstances of the case, the Tribunal is right in law in excluding certain comparable-companies on the ground of functional dissimilarity even when the comparable-companies satisfied all the qualitative and quantitative tests applied by Transfer Pricing Officer? (ii) Whether on the facts and circumstances of the case, the Tribunal is right in excluding certain comparable companies on the ground of RPT filter of these comparables are more than 15% even when the Transfer Pricing Officer had chosen proper comparables and in TP case, the selection of comparables is different from each case and depends on....

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....1,903/-. The assessee thereupon filed an application for rectification before the Transfer Pricing Officer who by an order dated 22.02.2011 revised the transfer pricing adjustment to Rs. 62,88,161/-. On receipt of the order from the Transfer Pricing Officer the Assessing Authority passed a draft assessment order on 30.12.2010. The assessee thereupon filed objections before the Dispute Resolution Panel. The Dispute Resolution Panel by an order dated 26.09.2011 under Section 144C(5) of the Act upheld the order of assessment and issued directions to the Assessing Authority. Thereafter, the Assessing Authority passed an order of assessment on 30.10.2011 by which the Assessing Authority made transfer pricing adjustment of Rs. 62,88,83,161/- on t....

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....tivity. 5. It is also urged that turnover of the company does not have any impact on the margins and earned and there is co-relation between the size of the company and its profit margin in software development services. It is also argued that when a comparable is functionally similar to that of the assessee, the same cannot be excluded merely because its turnover is lower than that of the assessee and turnover cannot be a relevant criteria in a service sector. It is also pointed out that the tribunal ought to have directed an enquiry under Rule 10B(3) of the Rules to determine as to whether material differences between the assessee and the said entity can be eliminated. It is also urged that while determining the comparability of transact....

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.... tribunal has not applied Related Party Transaction filter at the rate of 15% and therefore, the second and third substantial question of law does not arise for consideration. Alternatively, it is submitted that turnover is a related criteria for determination of comparability of companies and a company with high turnover cannot be compared with a captive service provider like the assessee who does not undertake any risk. In support of aforesaid submissions, reliance has been placed on decisions in 'CIT VS. PENTAIR WATER INDIA (P.) LTD.', (2016) 381 ITR 216 (BOMBAY), 'CIT VS. AGNITY INDIA TECHNOLOGIES (P.) LTD.', (2013) 36 TAXMANN.COM 289 (DELHI), PCIT VS. SAMSUNG R & D INSTITUTE BANGALORE PVT. LTD. ITA NO.622/2017 DATED 30.....