TaxTMI 
TaxTMI 
2025 (4) TMI 1469
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....nt in its Return of Income ('ROI'); Time barred proceedings 2. erred in not passing the final assessment order within the time limit as provided under Section 153 of the Act ie., the outer limit for passing of the final assessment order which for AY 2020-21 would be 30 September 2023, thus making the assessment proceedings time barred and bad in law and thereby it should be quashed; A Transfer Pricing grounds in relation to international transaction of Provision of IT enabled services Reference to the TPO 3. erred in making a reference of the Appellant's case to the TPO, without complying with the provisions of Section 92CA, and then making a transfer pricing adjustment of Rs 19,96,41,940 to the Appellant's income which is bad in law: Rejection of comparables selected by the Appellant in its TP documentation 4. erred in rejecting comparable companies selected by the Appellant i.e. Anderson Business Solutions Private Limited. Suprawin Technologies Ltd, Sundaram Business Services Limited, iSN Global Solutions Private Limited and Crystal Hues Limited by applying a turnover filter of less than 1/10 times and more ....
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....risks assumed by the Appellant and the risks assumed by the comparable companies: Benefit of +/-3% 12. erred, in law and facts, by not considering that the adjustment to the arm's length price, if any. should be limited to the lower end of the 3 percent range as the Appellant has the right to exercise this option under the proviso to Section 92C of the Act; Incorrect calculation of the transfer pricing adjustment 13. the learned AO/ TPO erred in incorrectly computing the transfer pricing adjustment to Rs 19,96,41,940 whereas the correct calculation of the transfer pricing adjustment as per his own computation would be Rs 11,96,41,940, B. Corporate Tax grounds Incorrect computation of the Dividend Distribution Tax (DDT) demand 14. erred in granting DDT credit of Rs 50,00,000 instead of DDT credit of Rs 57,00,917 claimed by the Appellant in the ROI, thus resulting in the short grant of DDT credit, 15. erred in incorrectly levying consequential interest amounting to Rs 4,89,027 under Section 115P of the Act; 16. erred in adjusting disputed DDT demand of Rs 71,261 from the total refund due to the Appel....
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....on 144B of the Act, assessing total income of the Appellant at INR.83,11,88,790/- computed as under: SI. Description Amount (INR) 1 Income as per return of Income filed on 11/02/2021 63,15,46,850/- 2. Income as computed under Section.143(1)(a) on 30/11/2021 63,15,46,850/- 3 Variation in respect of issue of TP Adjustment 19,96,41,940/- Total Assessed Income 83,11,88,790/- 3.2. Being aggrieved, the Appellant has preferred the present appeal before the Tribunal against the Final Assessment Order, dated 29/07/2024, on the grounds reproduced in paragraph 2 above. 4. We have heard both the sides and have perused the material on record. 5. The Appellant has challenged the Transfer Pricing Adjustment of INR.19,96,41,940/- made by the Assessing Officer by way of Ground No. A1 to A 13 reproduced here in Paragraph 2 above. Ground No. 1 6. Ground No.1 raised by the Appellant pertains to assessing the total taxable income of the Appellant of INR.83,11,88,790/- as against a total income of INR.63,15,46,850/- as computed by the Appellant in its return of income. During the course of hearing the Learned Authorized Representative fo....
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....on of MPS Limited had also come up for consideration during the assessment proceedings for the Assessment Year 2022-2023. A copy of order, dated 06/01/2025, passed under Section 92CA(3) of the Act for the Assessment Year 2022-2023 has been placed on record by the Appellant. On perusal of the same we find that the TPO has excluded MPS Limited from the final list of comparables by placing reliance upon the decision of Tribunal in the case of the Appellant for the Assessment Year 2017-2018 [ITA No.732/Mum/2022, dated 18/08/2022]. On perusal of aforesaid decision, we find that the Tribunal had directed exclusion of MPS Limited from the list of comparables on the ground of functional dissimilarities. The relevant extract of the aforesaid decision of Tribunal reads as under: "9. The next company, which the assessee seeks exclusion is M/s MPS Ltd. The Ld A.R submitted that this company is engaged in rendering end to end services to its clients in publishing sector, which included content creation and production services. He submitted that this company is also engaged in software services and product development. In the annual report of this company, it is reported that it is enga....
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.... Solutions (Page No. 520 of the Paper Book). As per the Annual Reports the focus of MPS Limited was on Content Solutions with a strong emphasis on learning outcomes enabled by efficient yet immersive learning paths. It was stated that MPS Limited provided services across the entire author- to-reader value chain, from content authoring and development to distribution and delivery (Page No. 523 of the Paper Book). Further, the principle business activities of the Company were stated to be Content Solutions (82% of total turnover) and Platform Solutions (18% of total turnover) (Page No. 540 of the Paper Book). However, no further segmental details are available. Further, MPS Limited has also developed proprietary products/platform. On the other hand the Appellant continues to be a captive service provider providing support services to its AEs. Thus, MPS Limited is has functionally dissimilarities and in absence of segmental data, MPS cannot be taken as a comparable. Therefore, respectfully following the decision of the Tribunal in the case of the Appellant for the Assessment Year 2017-2018, we direct the Assessing Officer/TPO to exclude MPS Limited from the list of comparables 12. ....
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....r then the same cannot be included in the list of comparables selected for benchmarking the international transaction. Therefore, the ITAT has held that if the comparable is functionally same as that of tested party then same cannot be rejected merely on the ground that data for entire financial year is not available. If from the available data on record, the results for financial year can reasonably be extrapolated then the comparable cannot be excluded solely on the ground that the comparables have different financial year endings." In view of the above said decision rendered by Hon'ble Delhi High Court, we accept the contentions of Ld A.R that this company could not have been rejected by the TPO merely for the reason that it follows different accounting year, when the financial year results for the period matching with that of the assessee could be collated. However, as submitted by Ld D.R, it is required to be examined as to whether this company gets itself qualified in other filters applied by the TPO also. Accordingly, we are of the view that this comparable company needs to be examined afresh at the end of AO/TPO. Accordingly, we restore this comparable company ....