TaxTMI 
TaxTMI 
2021 (7) TMI 897
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....the Hon'ble Rajasthan High Court in the case of Chambal Fertilizers which was followed by various Tribunals across the country in favour of the assessee. This subsequent decision of Hon'ble Rajasthan High Court was stated to be sufficient cause by the ld. AR and by the assessee in its affidavit. In our considered opinion, this is not a sufficient cause which would explain the delay in favour of the appeal by the assessee. We hold that the assessee had merely adopted "wait and watch" approach and had waited for the favourable decision from a higher forum, on the impugned issue and allowability of deduction on account of education cess. We are not inclined to accept this argument of the assessee and the ld. AR. though the issue on merits is covered in favour of the assessee even by the decision of the Hon'ble Jurisdictional High Court in the case of Sesa Goa Ltd., but still we find that since assessee had not preferred the appeal in time, for the reasons stated hereinabove, we are not inclined to condone the delay in filing of appeal by the assessee. Accordingly, the appeal of the assessee is hereby dismissed as unadmitted. ITA No.4609/Mum/2017 (A.Y.2010-11) 3. The revenue has rais....
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....a (P) Ltd VS DCIT (110 TTD 448) which has been further upheld by the decision of ITAT Mumbai in the case of Syscom Corporation Ltd Vs ACIT (TS-195-ITAT-2013 (Mum). 3. The appellant craves leave to add, amend, vary, omit or substitute any of the aforesaid grounds of appeal at any time before or at the time of hearing of appeal. 4. The appellant prays that the order of CIT(A) set-aside and that of the assessing officer be restored. 4. We have heard rival submissions and perused the materials available on record. At the outset we find from the perusal of the aforesaid grounds, the Revenue has merely challenged the rejection of certain filters which were originally applied by the ld. TPO but were rejected by the ld. CIT(A) while passing its order on 15/03/2017. The revenue has not challenged either the inclusion or exclusion of any comparable which was decided by the ld. CIT(A). Hence, we confine our order in the impugned appeal only to rejection of certain quantitative and qualitative filters by the ld. CIT(A). 4.1. We find that assessee has rendered support service to various affiliates. The key activities undertaken by the assessee under the instruction of its AEs are as under....
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....g three comparables on account of unavailability of data). Sr. No Name of Company FY 2009-10. OP / TC (%) 1 A O K In-House B P O Services Limited 0.11 2 Aditya Birla Minacs Worldwide Limited 7.92 3 B N R Udyog Limited 23.77 4 Cameo Corporate Services Limited 7.84 5 Cosmic Global Limited 14.97 6 Delta Services (I) Pvt. Limited 5.17 7 In House Productions Limited 17.30 8 Informed Technologies India Limited 26.15 9 Infosys B P O Limited 31.20 10 Optimus Global Services Limited -12.25 11 Sparsh B P O Services Limited 2.57 12 Tirnex Group India Limited 5.70 Arithmetic Mean 10.87 4.6. Based on the financial results of the assessee, the operating profit / total cost ('OP/TC') margin came to 9.52%. Such OP/TC margin of 9.52% was compared to the average arithmetic mean of 10.87% (single year update) earned by the comparables. Accordingly, on applying the proviso to section 92C(2) of the Income Tax Act, 1961, it was concluded by the assessee that the international transactions were compliant with the arm's length standard. 4.7. The ld. TPO accepted the selection of tested party and the Most Appropriate Method (MAM) adopted by the....
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....by the aforesaid order of ld. CIT(A), the Revenue has preferred the appeal before us only challenging the rejection of three filters by the ld. CIT(A) which was used by the ld. TPO for benchmarking the international transaction of the assessee. The comparables which were directed to be included / excluded are not subject matter of appeal before us by the Revenue. Hence, it would be relevant for us to address only the specific aspect of rejection of certain filters by the ld. CIT(A). 5. Rejection of filter which was applied by the ld. TPO wherein companies having export sales less than 75% of the total sales. We find that the assessee had contended before the ld. CIT(A) that for the purpose of comparability, it would be essential to consider the activity / functions performed by the respective comparable company rather than its geographical customer location. According to the assessee once a comparable company is functionally comparable with the functions performed by the assessee, then the same would have to be included as a comparable company irrespective of the fact whether its foreign exchange earnings emanating out of export sales is less than or more than 75% of total sales.....
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....n 75% of its sales derived from export market. Hence, we hold that the filter adopted by the ld. TPO in this regard would be a valid filter. We find that none of the observations considered by the ld. TPO were even addressed by the ld. CIT(A) in his order, as rightly pointed out by the ld. DR before us. Accordingly, the ground No.2A raised by the revenue is allowed. 6. Rejection of filter which was applied by the ld. TPO wherein companies having related party transactions more than 25% of sales We find that the ld. TPO had applied filter by stating that companies with related party transactions less than 25% of the Revenues who were alone to be considered for the purpose of benchmarking the international transactions of the assessee and had observed as under:- "In the transfer pricing exercise, the international transactions of the taxpayer with its associated enterprises would be compared with uncontrolled transactions. As the most appropriate method is TNMM in the facts and circumstances of the taxpayer, the international transactions are aggregated at the enterprise level. Similarly, while aggregating various uncontrolled transactions of an independent enterprise, there may....
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....rmination of arm's length price. Hence, it would be just and fair to apply a filter by rejecting comparable companies having related party transactions more than 25% of the operating revenues. Hence, we hold that this filter applied by the ld. TPO for the purpose of determination of arm's length price is to be considered as a valid filter. We find that none of the observations considered by the ld. TPO were even addressed by the ld. CIT(A) in his order, as rightly pointed out by the ld. DR before us. Accordingly, the ground No.2B raised by the revenue is allowed. 7. Rejection of filter which was applied by the ld. TPO wherein companies having consistent losses We find that the ld. TPO had excluded all the companies with persistent losses / diminishing revenues for the last three years including the year under consideration. The ld. TPO observed that IT enabled sector is growing at Compounded Annual Growth Rate (CAGR) of more than 25% during the last 10 years or atleast for the last three years relevant to the year under consideration. He observed that the diminishing revenues indicate that there may be no utilization of assets or human resources for which reasonably accurate ad....