TaxTMI 
TaxTMI 
TaxTMI 
2024 (12) TMI 1615
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.... year 2020- 21 against the assessment order passed by the Assessment Unit Income Tax Department (the ld. assessing officer) u/s. 143(3) r.w.s. 144C(13) r.w.s. 144B of the Income Tax Act, 1961 (the Act) wherein the return income of the assessee of Rs.358,786,510/- is assessed at Rs.486,116,510/- incorporating adjustment as per the order of the Assistant Commissioner of Income Tax, Transfer Pricing-1(3)(1), Bangalore (the ld. TPO) making the adjustment of Rs. 127,330,000/-. The learned transfer pricing officer passed an order u/s. 92C(3) of the Act dated 26/5/2023 proposing the transfer pricing adjustment of Rs.151,910,000/- incorporated in the draft assessment order u/s. 144C (1) of the Act dated 26/9/2023 which was objected before the learn....
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....e Transfer P-1c.ing ("TP") documentation and thereby non-inclusion of various functional comparable companies in the search matrix resulting in narrow comparable set. 5. That on the facts and circumstances of the case, the Ld. AO / TPO / DRP erred in selecting following comparable companies as comparable, despite them failing the test of comparability: * Sikraft Infotech Limited * Genesys International Corporation Ltd 6. That on the facts and circumstances of the case, the Ld. AO / TPO / DRP erred in rejecting following companies considered in TP documentation of the Company despite them passing the test of comparability: * Axiscades Engineering Technologies Limited * May Softech Private Limited * XS Cad India Private L....
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....atisfying the multiple year data criteria to be adopted for comparability analysis. 12. That on the facts and circumstances of the case, the Ld, AO / TPO / DRP erred in applying an export earning filter of 75% of the total sales, leading to a narrower comparable set. 13. That on the facts and circumstances of the case. the Ld. AO / TPO / DRP erred in wrongly computing the operating mark-up of the companies identified as comparable and not rectifying the mistake apparent from record as highlighted by the Assessee in such operating mark-up computation of the comparable companies. 14. That on the facts and circumstances of the case, the Ld. AO / TPO / DRP erred in not making suitable adjustments to account for differences in the worki....
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....te method and selected the profit level indicator of operating profit/operating cost. In the transfer pricing study report, it has considered the benchmarking analysis and the result of its ITeS fellow subsidiary ABB Global Industries and Services Private Limited which has a similar functional profile, wherein seven comparable companies were selected in respect of the engineering services segment. As the margin of the assessee was within the range of the margin of the comparable companies it was stated to be at arm's-length. 5. The learned transfer pricing officer examined the TP study report and held that assessee has not applied the filter with respect to the significant related party transaction as well as where the insufficient financi....
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....of the comparable set at 24.45% and accordingly an adjustment was made at Rs. 151,910,000 by order u/s. 92CA(3) of the Act dated 26/5/2023. 6. The learned dispute resolution panel passed the direction, according to which, the order giving effect was passed by the learned TPO and the adjustment of Rs. 127,330,000 was retained. 7. The learned authorized representative submitted that one comparable company is Mahindra Consulting Engineers Ltd. While computing the margin of the same, the learned AO/TPO and the DRP has not taken into consideration the bad debt written off as operating in nature. He submitted that bad debt written off cannot be an unascertained liability but is an ascertained liability which is written off in the books of the a....
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....the learned authorized representative is that in the computation of PLI of that margin, the learned TPO has not included the bad debts written off which have been disclosed in note number 23 of the profit and loss account. We have carefully perused the profit and loss account of the comparable company and find that at note number 23 - other expenses - (o) bad debts written off of Rs. 32,309,057 are debited. The learned dispute resolution panel also has categorically directed the learned transfer pricing officer to compute the margins of the comparable as per the annual accounts. The learned TPO, despite the same, has not computed it. According to the provisions of section 144C(10), every direction issued by the dispute resolution panel shal....