TaxTMI 
TaxTMI 
2022 (4) TMI 1487
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....t passed by the TPO on 17.04.2017. ii) making an adjustment towards the Arms length price without appreciating the fact that the Transfer Pricing Officer while passing the order U/s.92CA of the Act has not met with the specific objections filed by the appellant and ignoring the same without any justification. iii) making an adjustment as per the order giving effect to the order of the DRP passed by the TPO vide order dated 17.04.2017 ignoring the fact that, the DRP has passed orders without meeting the objections of the appellant in regard to the comparables selected and rejecting the objections with incorrect justifications and not providing the eligible assessee an opportunity to meet with such alleged justification. iv) Ignoring the fact that, the DRP has deleted the company M/s. ICRA Techno Analytics from the list of comparables of the TPO in his order U/s.92CA(3) of the act, dated 30.09.2016 without proper justification and since the TPO has selected this company as a comparable. could not have been rejected by the DRP. v) Ignoring the fact that. the DRP has not accepted the specific objection of the appellant that, the size of the company s....
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....ial own intangibles and functionally different. The comparable has incurred large foreign currency expenditure making the comparable functionally different. iv) The Learned TPO has erred in including the company M/s.Mind Tree Ltd as comparable ignoring the fact that. the said comparable has substantially high turnover. hence not comparable to the appellant and also that. the said comparable has substantial own intangibles. The comparable has incurred large foreign currency expenditure making the comparable functionally different. v) The Learned TPO has erred in including the company M/s.Persistant Systems Ltd as a comparable ignoring the fact that, the said company has substantial high turnover, hence not comparable to the appellant and also that, there are substantial own intangibles and functionally different. vi) The learned TPO has erred in excluding the company M/s.R. Systems International Ltd for the reason that, the said company has a different year ending i.e, 31.12.2012 ignoring the fact that. the financials cover a period of 9 months of the F.Y.2012-13 and therefore, since the major portion of the year is covered. The company could not have been....
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....ment. 3. GROUNDS RELATING TO PROCEDURE The learned Assessing Officer has erred in i) making a reference for the determination of the Arm's Length Price of the international transactions to the TPO without demonstrating as to why it was necessary and expedient to do so and ii) passing the order without demonstrating that the appellant had any motive of tax evasion all the more so under the circumstances. wherein the total income of the appellant is exempt under the provisions of section 10AA of the act. 4. GROUNDS RELATING TO THE OTHER ADDITIONS MADE IN THE ASSESSMENT CONSEQUENT TO FINDINGS OF THE DRP i) The learned Assessing Officer erred in reducing the telecommunication expenses of Rs.94,68,469/- and also the insurance charges of Rs.1,76,939/-from the export turnover while determining the adjusted export turnover for computing the eligible deduction U/s.10AA of the act, ignoring the position of law that. such reduction is not contemplated under the provisions of the act. 5. PRAYER In view of the above and the other grounds which may be adduced at the time of hearing. the appellant prays that the Hon'ble Tribun....
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.... 5.1 The assessee is a 100% subsidiary of M/s. Meritor Holdings (Barbados) Ltd. The ultimate holding company is M/s. Meritor Inc. USA which is engaged in the manufacture of automotive. During the year, the assessee reported the following international transactions: Particulars Received/Receivable Paid/Payable Method Used Software Exports 292811166 TNMM Management Consultancy Charges 14002404 TNMM Interest on ECB loan 1726700 CUP Reimbursement of Expensive Paid 11112728 Other Method Reimbursement of Expensive received 14154370 Other Method Total Amount 306965536 26841832 5.2 The Ld.TPO noted that assessee computed the margin at 12.16% by using OP/OC PLI. It used TNMM as the most appropriate method and used following 9 comparables having average margin at 8.32%. It was thus submitted by the assessee that the transaction is at arms length: Sl.No. Name of the Company (M/s.) Wt. Avg (%) 1. R Systems International Ltd. 14.55 2. Thinksoft Global Services Ltd. 15.99 3. Datamatic Global Services Limited 14.11 4. R.S. Soft....
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.... plant & equipment are assets vested with MCIPL, whereas the intangibles being the IPR vests with the associated enterprise M/s. Heavy Vehicle Systems LLC, USA. Risks assumed: Service risk, Foreign currency risk, Human capital risk, Deliverable risk Characterisation: Based on the above assessee has been characterized to be a risk mitigated service provider catering to its AE only. 9. Based on the above we shall undertake the comparability analysis in respect of the alleged comparables. In Ground No.1(iv) &(v)-(vi), the assessee seeks exclusion of capital following comparables: • ICRA Techno Analytics • Larsen and Toubro Ltd, • Persistent Systems Ltd • Mindtree Ltd In respect of ICRA Techno Analytics, the Ld.AR submitted that, the DRP had directed its exclusion however, the Ld.AO/TPO did not follow the directions. The Ld.AR, thus prayed for, exclusion of this comparable based on the observations of DRP directions. The Ld.CIT.DR do not object for the exclusion of this comparable from the finalist. Considering the submissions hereinabove, we direct the Ld.AO/TPO to exclude ICRA Techno Analytics as directed by the....
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..../2013, order dated 6- 7-2018. The Tribunal in this decision after review of entire case laws on the subject, considered the question, whether companies having turnover more than 200 crores upto 500 crores has to be regarded as one category and those companies cannot be regarded as comparables with companies having turnover of less than 200 crores, the Tribunal held as follows:- "17.7 We have considered the rival submissions. The substantial question of law (Question No. 1 to 3) which was framed by the Hon'ble Delhi High Court in the case of Chryscapital Investment Advisors (India) Pvt. Ltd., (supra) was as to whether comparable can be rejected on the ground that they have exceptionally high profit margins or fluctuation profit margins, as compared to the Assessee in transfer pricing analysis. Therefore as rightly submitted by the learned counsel for the Assessee the observations of the Hon'ble High Court, in so far as it refers to turnover, were in the nature of obiter dictum. Judicial discipline requires that the Tribunal should follow the decision of a nonjurisdiction High Court, even though the said decision is of a non-jurisdictional High Court. We however find....
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....igh Court in the case of Chris capital Investment (supra). We have already held that the decision rendered in the case of Chris capital Investment (supra) is obiter dicta and that the ratio decidendi laid down by the Hon'ble Bombay High Court in the case of Pentair (supra) which is favourable to the Assessee has to be followed. Therefore, the decisions cited by the learned DR before us cannot be the basis to hold that high turnover is not relevant criteria for deciding on comparability of companies in determination of ALP under the Transfer Pricing regulations under the Act. For the reasons given above, we uphold the order of the CIT(A) on the issue of application of turnover filter and his action in excluding companies by following the ratio laid down in the case of Genisys Integrating (supra)." 14. From the above, the objection of the Ld.CIT.DR is also met with, and therefore we are of the view that the comparables sought for exclusion deserves to be upheld on failure to fulfil turnover filter. We accordingly direct the Ld.AO/TPO to exclude Larsen & Toubro Infotech Ltd., Mindtree Ltd. and Persistent Systems Ltd. from the finalist. Accordingly Ground No.1(iv) &(v)-(vi), ....