TaxTMI 
TaxTMI 
2023 (10) TMI 18
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.... 2. The directions dated 16.12.2022 of the Ld. Dispute Resolution Panel (Id DRP') passed u/s 144C(5) / 92CA(3) r.w.s. 254 of the Act are laconic and devoid of reasoning or application of mind. 3. The Ld. TPO/DRP have grossly erred in determining an adjustment of Rs. 17,04,89,703 to the value of international transactions entered into by the Appellant." These grounds are general in nature, which do not require any adjudication. 3. Ground Nos.4 to 6 are with regard to exclusion of Hartron Communications Ltd. from the list of comparables which reads as under:- 4. The Ld. TPO/DRP have erred in selecting Hartron Limited as a comparable company inter alia because - " 4.1. The appellate order passed by the Hon'ble ITAT in April 2019 in the first round of litigation, directing the Ld. TPO to consider various case laws and objections of the Appellant have not been followed by the Ld. TPO/DRP. 4.2. The net margin of BPO Segment of Hartron Communications was distorted as the company accounted its export income on cash basis and expenditure on accrual basis. 4.3. Hartron Communications is functionally different from the Appellant as apar....
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..... Contracting with customers. 7. Conceptualization 8. Personnel Management 9. Technology 10. Delivery of call centre services 11. Quality assurance 12. Post delivery services 13. General administration and management function 3.3 Further, it was submitted that this company M/s. Hartron Communications Ltd. issue came for consideration in the case of M/s. Software Paradigms Infotech Pvt. Ltd. in IT(TP)A No.2828/Bang/2017 dated 27.12.2021, wherein they relied on the earlier of the Tribunal in the case of ISG Novasoft Technologies Ltd. Vs. DCIT in IT(TP)A No.42/Bang/2018 for the assessment year 201314 dated 29.4.2019 and held as under: "Hartron Communications Ltd. Further the learned AR emphasized that this comparable company is also engaged in real estate activity. The learned AR referred to page 1344 and 1350 of the paper book 2 and emphasized the entry into real estate business. The learned AR made submissions on the trading of shares of this company and relied on the observations of the Auditors. We found that the Chennai Bench of Tribunal in the case of M/s. Cameron Manufacturing India Pvt. Ltd. vs....
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....justment) resulting in computation of excessive TP adjustment. 7.1. That in the original TP order dated 22.09.2017 passed by the Ld. TPO, Microland's PLI was correctly taken as 9.84% whereas in the OGE dated 28.01.2022, Microland's PLI has been wrongly taken as 17.83%, which in fact is the PLI of Microgenetic System Limited." 4.1 In this ground, the ld. A.R. submitted that in first TP order PLI in respect of Micro Land Ltd. has been computed at 9.84%. However, he has taken it at 17.83% consequent to the order passed by the Tribunal in IT(TP)A No.2541/Bang/2017 dated 5.4.2019. 4.2 In this assessment year, the TPO considered the margin in respect of M/s. Microgenetic Systems Ltd. at 17.83%. Similarly, he has considered the margin in the case of Microland Ltd. at 17.83%. The contention of the ld. AR. is that this is a typographical mistake committed by TPO and on earlier occasion, in the first round the TPO considered the margin of Microland Ltd. at 9.84%. In our opinion, this is required to be re-examined by AO/TPO. Accordingly, the issue is remitted to the file of AO/TPO for fresh consideration and take the correct PLI on this comparable. 5. Ground No.8 of ....
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....red the material on record. We find that the DRP, at para 14 of its order, had relied on its decision in the earlier Assessment Year 2010-11 and directed the TPO to allow risk adjustment and decide the percentage of risk adjustment to be allowed. As a matter of guidance, the DRP referred to a decision of the ITAT, Hyderabad in the case of Dv. CIT v. Hellosoft (P.) Ltd.f20137 32 taxmann.com 101/57 SOT 4 wherein 1% risk adjustment was allowed. From the above, it is seen that the DRP has merely referred to a decision in which 1% risk adjustment was granted and it is not correct to say that DRP directed that 1%. risk adjustment is to be granted in this case. 7.3.2 The Bangalore Benches of the Tribunal, while allowing risk adjustment to captive service providers, as a matter of principle has held in many cases, including the one cited (supra), that risk adjustment cannot be granted unless the assessee has submitted computation of the same before the authorities below. In the case on hand, we find that though the assessee in Form 35A submitted before the DRP, at Annexure/Objection 13 thereof mentioned risk adjustment at 4.92%, no scientific basis or working in respect of the ass....
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....The TPO had considered average PLR of 14.58% while computing the working capital adjustment. Ld. AR had submitted that the assessee is only receiving in US currency therefore rate as appliable in US should be considered for working out working capital adjustment. He relied upon various judgement including Cotton Natural 276 CTR 445, Rampgreen Solutions etc. The ld. D.R. had submitted that this ground may also be sent back to the TPO to recompute the working capital adjustment, after taking into various judgement relied upon by the assessee." 6.3 In view of above order of the Tribunal, we direct the AO/TPO to pass consequential order in conformity with the above direction as Tribunal on earlier occasion as reproduced herein above. 7. Ground No.10 of the assessee's appeal reads as follows: 10. "The Ld. AO has grossly erred in computing tax on assessed income at the erroneous rate of 34.37% (before surcharge and education cess instead of the applicable tax rate of 30%." 7.1 After hearing both the parties, we are of the opinion that this ground is consequential since we have remitted certain issue involved in this appeal to the file of AO/TPO for reconsiderat....