AI Drafter 
TaxTMI 
TaxTMI 
2016 (9) TMI 1592
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....n short 'the Act') pursuant to the direction given by the Dispute Resolution Panel u/s 144C(13) of the Act, it has altogether raised nine grounds of which Ground No.9 is general in nature needing no specific adjudication. 2. Ld. AR, at the outset, submitted that he was not pressing Ground Nos. 4, 5 & 8 of the appeal. Accordingly, Ground Nos. 4,5 & 8 are dismissed as not pressed. 3. Ground Nos. 1 to 3 of the appeal assail the transfer pricing adjustment of Rs. 3,37,17,672/- made in relation to its data management services in so far as TPO did not exclude two comparables viz. M/s Cosmic Global Ltd and M/s E4E Healthcare Business Services Pvt. Ltd. from the list of comparables he considered for benchmarking the value of the international....
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....arrived at the arithmetical mean of the PLI of such comparables as under: Sr. No. Name of the company OP/TC)% 1 Cosmic Global Ltd 48.10 2 E4E-Health Solutions Ltd [formerly known as Nittany Outsourcing Services Pvt. Ltd] 33.31 3 R Systems International Ltd.(seg) 14.09 4 Informed Technologies India Ltd 23.29 Arithmetic mean 29.69 7. Applying the PLI of 29.69%, TPO recommended an upward adjustment of Rs. 3,37,17,672/-. 8. When a draft order on the above lines was issued to the assessee it chose to move the DRP. The DRP, however, rejected the contentions of the assessee and held that the ALP done by the TPO was absolutely in order. Thereafter, assessment was completed by making....
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....s functionally dissimilar. 10. Insofar as M/s E4E Healthcare Business Services Pvt. Ltd. was concerned, ld. AR submitted that current year data of the said company was not available in public domain. As per the ld. AR, assessee was not aware from where the TPO had extracted the financial results of the said company for the relevant previous year for arriving at its PLI. This aspect, as per the ld. AR was brought to the specific notice of the DRP in its objection filed before the DRP. However, the DRP for the very same reason as it took for M/s Cosmic Global Ltd rejected the contention of the assessee. 11. In support of his pleading for exclusion of M/s Comic Global Ltd, reliance was placed by the ld. AR on the decision of Pune Bench o....
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....e. The pleading of the assessee now before us is that M/s Cosmic Global Ltd was in the medical transcription and translation services and was outsourcing its work. Hence, according to the ld. AR, it could not be considered as a proper comparable. Reliance has been placed on the decision of the Pune Bench of the Tribunal in the case of Schlumberger Global Support Ltd (supra). Vis-à-vis, M/s E4E Healthcare Business Services Pvt. Ltd., claim of the assessee was that its data for the relevant previous year was not available in the public domain. Support has been sought from the decision of Delhi Bench of the Tribunal in the case of Bechtel India Pvt. Ltd (supra). Be that as it may, what we find is that DRP had not adjudicated the correct....
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....is that computation of the PLI of the comparable companies selected was not properly done. 15. Ld. AR submitted that assessee was charging depreciation at a rate much higher than what was prescribed by Schedule XIV of the Companies Act, 1956. As per the ld. AR, out of the four comparables considered by the TPO, M/s Cosmic Global Ltd, M/s Informed Technologies India Ltd and M/s R Systems International Ltd. had charged depreciation as per Schedule XIV rates. Reliance was placed on pages 175, 185 and 202 of the paper book. As against this, ld. AR submitted that assessee had a higher rate of depreciation than what was stipulated in Schedule XIV. Relying on Revised Edition of Guidance Note on Report u/s 92E of the Act (Transfer Pricing) issue....
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....sted for dissimilarities in treatment of various expenditure including notional expenditure like depreciation, when such dissimilarities can be measured and quantified. Otherwise, it could erode the comparability. The Panaji Bench of the Tribunal in the case of M/s Pentair Water India Pvt. Ltd (supra) had held as under: "The common contention in respect of computation of TNMM i.e. operating profit taken by the ld. AR in respect of the comparables is that while computing the profit ratio, profit prior to depreciation should be computed as it will give true and fair profit ratio without being affected by the depreciation charged by each of the companies. We noted that different companies have adopted different method of depreciation. In fa....