2018 (7) TMI 2307

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....08 for AY 2003-04. 2. We have heard the learned counsel for the Respondent - Revenue, Mr, E.I. Sanmathi. 3. The appeal was admitted by the Co-ordinate Bench of this Court on 30-11-2011 with the following two Substantial Questions of law:- 1. Whether on the facts and circumstances of the case and the law the finding of the Income Tax Appellate Tribunal that all the companies which have earned profit at less than 6% should be excluded for consideration of comparable companies, is contrary to the provisions of Sec. 8E for determination of income under special cases? 2. Whether the finding of the Income Tax Appellate Tribunal that payment of compensation of Rs.105 lakhs paid by the appellant is a capital expenditure is j....

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....uch exercise of framing and answering such substantial question of law. On the other hand, the appeals of the present tenor as to whether the comparables have been rightly picked up or not, Filters for arriving at the correct list of comparables have been rightly applied or not, do not in our considered opinion, give rise to any substantial question of law. 56. We are therefore of the considered opinion that the present appeals filed by the Revenue do not give rise to any substantial question of law and the suggested substantial questions of law do not meet the requirements of Section 260-A of the Act and thus the appeals filed by the Revenue are found to be devoid of merit and the same are liable to be dismissed. 57. We m....

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....d in that way would be in the nature of capital expenditure. The payment has not been made for running the business carried on by the assessee in the normal course. So it is not possible to hold that the payment was in the nature of revenue expenditure. While dealing with the transfer pricing issue, particularly while recomputing the profit margin attributable to assessee's business, we have held that the payment is an extraordinary item and has to be excluded from the expenditure side to work out the operating profit of the assessee. This payment is not an operational expenditure. It is a different matter that the assessee has not acquired any tangible asset or any enduring benefit. It is not relevant how the assessee is going to account i....