TaxTMI 
TaxTMI 
2026 (6) TMI 286
X X X X Extracts X X X X
X X X X Extracts X X X X
....eserves to be quashed. 4. The brief facts of the case are that the assessee is a company which filed its return of income for the assessment year 2021-22 on 14.03.2022, declaring total income of Rs. 62,29,88,586/-. The return of income of the assessee was processed by CPC under section 143(1) of the Income Tax Act, 1961 ("the Act") vide intimation dated 22.09.2022, wherein an adjustment of Rs. 23,972/- was made on account of interest on TDS, and the total income of the assessee was determined by CPC at Rs. 62,30,12,560/-. The case of the assessee was also selected for scrutiny and accordingly notice under section 143(2) of the Act was issued by the Ld. AO on 28.06.2022. Since there was involvement of international transactions, the case of the assessee was referred to the Ld. TPO for determination of the arm's length price. The Ld. TPO, vide order passed under section 92CA(3) of the Act dated 18.10.2023, proposed a total transfer pricing adjustment of Rs. 20,45,15,305/- in respect of the international transactions. Based on the said order of the Ld. TPO, the Ld. AO passed a draft assessment order under section 144C(1) of the Act dated 13.12.2023, proposing an addition of Rs. 20,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e the details of related party transactions are available on record, the Ld. TPO ought to have computed the RPT filter and thereafter decided the issue regarding inclusion or exclusion of the said company from the set of comparables. It was further submitted that the company was wrongly excluded without carrying out proper verification of the RPT percentage. Accordingly, the Ld. AR prayed before the Bench that the issue may be set aside to the file of Ld. TPO with a direction to compute the RPT filter and thereafter consider inclusion of I Services India Private Limited in the final set of comparables in accordance with law. 9. Per contra, the Learned Departmental Representative ("Ld. DR") strongly relied upon the order of Ld. Ld. AO/TPO. 10. We have heard the rival submissions and perused the material available on record. With regard to the exclusion of I Services India Private Limited by the Ld.AO/TPO from the set of comparables, we have gone through page nos. 49 and 50 of the order of the Ld. TPO, which is to the following effect: 11. On perusal of the above, we find that the amounts relating to Profit & Loss items as well as balance sheet items have been specifically m....
X X X X Extracts X X X X
X X X X Extracts X X X X
....id amount of Rs. 13,28,45,599/- is required to be excluded while computing the RPT filter. It was submitted that if the said amount is excluded, then Cheers Interactive India Private Limited would satisfy the prescribed RPT filter and consequently become comparable to the assessee. Accordingly, the Ld. AR prayed before the Bench for inclusion of Cheers Interactive India Private Limited in the final set of comparables. 13. Per contra, the Ld. DR strongly relied upon the orders of the lower authorities. 14. We have heard the rival submissions and perused the material available on record. With regard to the exclusion of Cheers Interactive India Private Limited by the Ld.AO/TPO from the set of comparables, we have gone through para nos. 2.30 to 2.30.3 of the order of the Ld. DRP, which is to the following effect: 2.30 Ground of objection No. 30: Cheers interactive (India) Pvt. Ltd. Should be accepted Objection No.30.1: The learned TPO erred in rejecting Cheers interactive (India) Put. Ltd. ("Cheers Interactive") as a comparable company on ground that it falls RPT filter. 2.30.1 The assessee has contended that the company fulfils all the filters applied ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... file of Ld. TPO with a direction to exclude the amount of Rs. 13,28,45,599/- paid to key managerial personnel in India while computing the RPT filter and thereafter reconsider inclusion of Cheers Interactive India Private Limited in the final set of comparables in accordance with law after providing adequate opportunity of being heard to the assessee. 17. With regard to the issue relating to corporate tax adjustment, the Ld. AR submitted that an amount of Rs. 23,972/- on account of interest on TDS was already disallowed by the assessee while filing its return of income. However, while processing the return under section 143(1) of the Act, the CPC again added the very same amount. It was further submitted that while passing the final assessment order, the Ld. AO adopted the income computed under section 143(1) of the Act, as a result of which the amount of Rs. 23,972/- stood added twice in the hands of the assessee. Inviting our attention to para no. 8(A)(e) of Annexure - Other Information forming part of the intimation issued under section 143(1) of the Act, the Ld. AR demonstrated that the assessee itself had already disallowed an amount of Rs. 23,972/- under section 40(a)(ii)....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Income-tax Act, 1961 ("the Act") pursuant to the directions dated 13 September 2024 issued by the Dispute Resolution Panel, Bangalore u/s 144C(5) of the Act read with order dated 13 September 2024 issued by Transfer Pricing Officer u/s 92CA(3) of the Act, is bad in law and void ab-initio so far as it is prejudicial to the Appellant. Transfer Pricing Adjustment - Provision of Information Technology Enabled Services 2. That on the facts and circumstances of the case and in law, the learned Assessing Officer ("Ld. AO"y learned Transfer Pricing Officer ("Ld. TPO") erred in making transfer pricing adjustment of Rs. 20,45,15,305 in respect of transaction of provision of Information Technology Enabled Services ("ITeS"). Rejection of TP documentation and cherry picking of comparable companies 3. That on the facts and circumstances of the case and in law, the Ld. AO/ Ld. TPO erred in rejecting the transfer pricing documentation maintained by the Appellant in accordance with the provisions of the Act read with the Income-tax Rules, 1962 ("the Rules") and undertaking a fresh economic analysis during the course of assessment proceedings. 4. That on the facts and circumstances of....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... circumstances of the case and in law, the Ld. AO/ Ld. TPO erred by not including following companies as comparable companies: i. R Systems International Limited. ii. I Services India Private Limited. Cheers interactive (India) Pvt. Ltd. iv. MAA business solutions Pvt. Ltd. 11. That on the facts and circumstances of the case and in law, the Ld. AO/ Ld. TPO erred in not considering the submission regarding related party transaction details of | Services India Private Limited and thereby rejecting the company as comparable to the Appellant. Not restricting the adjustment to the value of international transactions 12. That on the facts and circumstances of the case and in law, the Ld. AO/ Ld. TPO erred in not restricting the Transfer pricing addition to the value of the international transaction. Benefit of working capital adjustment 13. That on the facts and circumstances of the case and in law, the Ld. AO/ Ld. TPO erred in not granting benefit of working capital adjustment to the Appellant as prescribed under Rule 10B(1)(e) of the Rules. Benefit of risk adjustment 14. That on the facts and circumstances of the case and in law, the Ld. AO/ Ld. TPO err....
X X X X Extracts X X X X
X X X X Extracts X X X X
....party INDLA LIEPWYDLIVPLAYCINE Description of sure of related post; relatively jaut a les updaen abuse of a as putsch --- poved and the scarves Desngoan of nature of transactions with related party powood. Imeancss nale Prefair Share Low Manling di tu -el Relund purty transactions [Abstract] Advances garn dunng year related party tratsadsons Advances tikm dung veut tried party tatsachees M. Other related party transactions expense --- Outstanding balances for related party transactions [Aliradi] JA. . ... Anoutis recen che relied party transactions 29OG 0 - Document 5 As it can be seen in the "description of nature of transaction with related party" includes P&L items like Rent paid and other balance sheet items and no bifurcation of between the two is provided in the annual report. Hence the RPT income /expense cannot be ascertained in this instance. Hence the company is rejected as a result. Document 6 Nature of transaction Transaction Value Outstanding Amount 2021 (s) 2020 2021 2020 (R.) A) Wholly owned Subsidiary Company Paid for (Rx.] [Rs] Cheers Interactive [Netherlands)B.V. Marketing services 6,43,44,982 6,45,63,59....