TaxTMI 
TaxTMI 
TaxTMI 
2023 (3) TMI 459
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....012. During the course of scrutiny assessment, the A.O. referred the matter to the Transfer Pricing Officer (TPO) to determine Arm's Length Price (ALP) of the international transactions undertaken by the assessee with its Associated Enterprises (AEs). The TPO vide order dated 30.01.2015 passed u/s 92CA of the I.T.Act, proposed the TP adjustment of Rs.18,10,43,171. Pursuant to the TPO's order, the draft assessment order was passed, incorporating the above TP adjustment as well as certain corporate tax additions. 3. Aggrieved, the assessee filed objections before the Dispute Resolution Panel (DRP). The DRP vide its directions dated 16.12.2015, disposed of the objections of the assessee. Pursuant to the directions of the DRP, the TPO gave effect to the same and consequently the TP adjustment was revised to `Nil' as against Rs.18,10,43,171 proposed by the TPO. The impugned final assessment order was passed on 29.01.2016 after considering DRP's directions. The A.O. in the final assessment order, arrived at the total assessed income at Rs.12,47,64,644. The computation of total income by the A.O. in the final assessment order, reads as follows:- (Amount in Rs.) ....
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....al transactions with AEs based in USA, the issues were settled under MAP and the communication of resolution of dispute under MAP with USA was dated 16.10.2020. It was further stated that the MAP resolution was implemented pursuant to the Hon'ble High Court's judgment in WP No.8114/2021 (judgment dated 22.04.2022). 7. We have heard rival submissions and perused the material on record. As per the Dun & Bradshtreet Classification of Software Industry, the companies could be classified under three major heads depending on the turnover of the company, viz., (a) Less than Rs.200 crores categorized as small size companies. (b) Rs.200 crores to Rs.2000 crores categorized as medium size companies; (c) More than Rs.2000 crores categorized as large size companies. 8. The turnover of the assessee for the relevant assessment year is 332 crore (wrongly mentioned as 290.45 crore in the DRP's directions at para 3.1). The turnover of the assessee being Rs.332 crore, it would fall within the category of medium size company. Therefore, the companies not falling within the range, i.e., Rs.200 crore to Rs.2000 crore deserves to be excluded. The issue of turnover filter has been examined by ....
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....rore). On this basis, the TPO is directed to exclude comparable companies having turnover of more than Rs.2000 Crores." 9. Further, the learned DR's plea that the multiple of 10 times of the turnover should be adopted while adopting the turnover filter, has been specifically rejected by the Bangalore Bench of the Tribunal in the case of Northern Operating Services Pvt. Ltd. in IT(TP)A No.101/Bang/2016 (order dated 15.02.2019). The relevant finding of the Tribunal reads as follows:- "15. The ld. DR submitted that the Hon'ble High Court of Karnataka in the case of M/s. Acusis Software (I) P. Ltd. V. ITO in ITA No.223/2017, judgment dated 14.08.2018, has taken the view that if the turnover of a comparable company is less or more than 10 times the turnover of the assessee, then it cannot be considered as a comparable company. The ld. DR drew our attention to the turnover of 10 comparable companies which is as follows:- Sl,No. Name of the case Operating Income Operating cost OP./OC 1 Accentia Technologies Ltd. 1,069,026,524 82,93,91,898 28.89% 2 Acropetal Technologies 494,399,332 389706574 26.86% 3. Cosmic Global Ltd. 62,496,615 5,69,15,360 9.81% 4. e4e Healthc....
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....ibunal, we are satisfied that the reasons assigned by the learned Tribunal in excluding the aforesaid company as comparable is also reasonable and the same deserves to be accepted by us. It is analysed by the learned Tribunal in extenso which arrived at a decision that the company which is having only Rs.45.33 lakhs turnover cannot be considered as comparable to the Assessee-company whose turnover is more than Rs.27 Crores. 16. The decision of the learned Tribunal in the other cases referred to by the learned counsel for the Appellant-Assessee would not render the findings of the learned Tribunal in the present case nugatory or perverse for the reason that analyzing of the comparables may be in a different context and the same need not be blindly or generally adopted in all cases, irrespective of the context or the circumstances calling upon for the inclusion/exclusion of the comparables which absolutely is a decision to be taken by the learned Tribunal as last fact finding authority. This view is supported by our judgment dated 25.08.2018 on Softbrands case (supra), which we find it appropriate to quote hereunder to its relevant extent:-" 17. He submitted that the question o....
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....f turnover of 10 times on both the sides of assessee's turnover has to be seen. Even the Tribunal in the order against which the appeal was filed, did not proceed on application of turnover filter with any such condition. Therefore, it is not correct to say that for application of turnover filter, tolerance range of turnover of 10 times on both the sides of assessee's turnover has been laid down by the Hon'ble High Court. The Hon'ble High Court held that the order of Tribunal is correct and calls for no interference and further held that no question of law arose for consideration. The decision rendered in the case of Autodesk (I) P. Ltd. (supra) of the Tribunal after analysing every conflicting views has ultimately concluded that the law laid down in the case of Genesis Integrated Systems (I) P. Ltd. (supra) has to be followed. The following were the relevant observations of the Tribunal:- "17.8. In view of the above conclusion, there may not be any necessity to examine as to whether the decision rendered in the case of Genisys Integrating (supra) by the ITAT Bangalore Bench should continue to be followed. Since arguments were advanced on the correctness of the decisions rendere....