TaxTMI 
TaxTMI 
2023 (10) TMI 18
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....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 apart from back-office services, it is also engaged in diversified services such as custom soft d....
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.... 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. DCIT in ITA No.336/ Chny/ 2018 dated 16/ 10/2018 has observed at para 7 which read as under: "7. Ground No.2.3: M/ s. Hartron Communications as the comparable company:- The Ld.AR submitted before us that M/ s. Hartron Communications had diversifie....
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.... 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 the assessee's appeal reads as follows: 8. "The Ld. TPO has grossly erred in not following the directions of the Ld. DRP in allowing risk adjustment to the Appellant. 8.1. That the Ld. TPO has erred in holding that the risk adjustment has already been granted - vide order dated 28.01.2022." 5....
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.... 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 assessee's claim vis-à-vis the comparable companies had been provided. Even on pages 890 & 891 of paper book (Annexure 9-B), no working has been given in respect of risk adjustment claimed at 6.26% vis-a-vis the comparable companies. Since the assessee has not given the computation of risk adjustment of the assessee vis-a-vis the comparable ....