TaxTMI 
TaxTMI 
2026 (9) TMI 36
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....me of assessee was assessed at Rs. (-) 3,20,78,082/- on 29.04.2016. The assessee preferred appeal before Ld. CIT(A)-38, New Delhi. Aggrieved, the assessee preferred appeal before ITAT, Delhi bench, and ITAT, New Delhi which was partly allowed. The issue was sent back to the file of Ld. TPO. As per direction of Hon'ble ITAT, Ld. ACIT, TPO-3(2)(2), New Delhi passed order dated 28.11.2022 u/s 92CA(3) r.w.s. 254 of the Act. The adjustment of Rs. 83,05,175/- was revised to Rs. 3,64,42,184/-. 3. Draft assessment order u/s 144C dated 09.12.2022 was passed. The assessee filed objection before DRP. The DRP vide order dated 31.08.2023 gave directions in pursuance to the directions final assessment order dated 25.10.2023 making TP adjustment of Rs. 2,36,84,410/- was made. 4. Being aggrieved, the appellant/assessee preferred present appeal on following grounds: "1. That on the facts and circumstances of the case and in law, the AO has erred in assessing the loss of the Appellant at INR 1,66,98,847 in pursuance to the directions issued by the DRP, as against the returned loss of INR 4,03,83,257. 2. That on the facts and circumstances of the case and in law, the final ass....
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....e provisions of erstwhile Companies Act, 1956, no person other than member/shareholder were entitled to inspect or obtain copies of the profit and loss account in case of a private limited company and therefore disclosure of profit and loss account by a private limited company was completely voluntary. 7.3. computing arbitrary gross profit margins of 100 percent or above in respect of the said companies for the sole purpose of making an unwarranted transfer pricing adjustment. 8. That on the facts and circumstances of the case, the learned TPO has erred in arbitrarily rejecting a functionally comparable company namely Starline Enterprises Limited (formerly known as L'avance Dirays Limited) quoting nonavailability of annual report, without heeding to the fact that the annual report of the said company was available in the public domain and was furnished before the TPO in various occasions by the Assessee. 9. That on the facts and circumstances of the case, the learned TPO has erred in computing the gross profit margin of Jewelsouk Marketplace Limited at 1.49% as against the correct gross profit margin of (-) 1.49%." 5. Ld. Authorized Representative ....
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....eliance in this regard is placed upon the following judicial precedents wherein it has been held that super profit making (100% or more) companies have to be excluded from the list of comparable before making transfer pricing adjustment: - Adobe Systems India (P.) Ltd. v. Add. CIT: [2011] 44 SOT 49 (Delhi) (URO) - Sapient Corporation (P.) Ltd. v. DCIT: [2011] 11 taxmann.com 69 (Delhi) -Baxter India (P.) Ltd. v. ACIT: [2017] 85 taxmann.com 285 (Delhi - Trib.) -Google India (P.) Ltd. v. DCIT: [2013] 29 taxmann.com 412 (Bangalore -Trib.) -SAP LABS India (P.) Ltd. v. ACIT: [2011] 44 SOT 156 (Bangalore) -Standard Chartered Finance Ltd. v. DCIT: [2023] 153 taxmann.com 343 (Mumbai - Trib.) -Banc Tec TPS India (P.) Ltd. v. ACIT: [2020] 117 taxmann.com 979 (Mumbai - Trib.) -M Modal Global Services (P.) Ltd. v. ACIT: [2019] 112 taxmann.com 67 (Mumbai - Trib.) -CES (P.) Ltd. v. DCIT: [2014] 41 taxmann.com 409 (Hyderabad - Trib.) * Profit & Loss account is not available in the annual reports shared by TPO: During the course of DRP proceedings, the DRP requested a copy of the source of financials of the ab....
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....ght of the above, the Appellant humbly requests your Honours to kindly exclude the above motioned four companies on account of nonavailability of profit and loss statement. * Reliance in this regard is placed upon the following judicial precedents wherein the companies were excluded from the final list of comparables due to non-availability of complete, accurate and reliable data in the public domain: -Mavenir India (P.) Ltd. v. DCIT: [2022] 141 taxmann.com 160 (Delhi - Trib.) -IHG IT Services (India) (P.) Ltd. v. DCIT: [2015] 64 taxmann.com 427 (Delhi - Trib.) -Xchanging Technology Services India (P.) Ltd. v. DCIT: [2015] 62 taxmann.com 253 (Delhi - Trib.) -ACIT v. CH2M Hill (India) (P.) Ltd.: [2022] 134 taxmann.com 303 (Delhi -Trib.) -Samsung India Electronics (P.) Ltd. v. DCIT: [2024] 165 taxmann.com 654 (Delhi - Trib.) -DSV Air & Sea (P.) Ltd. v. ACIT: [2025] 180 taxmann.com 787 (Mumbai - Trib.) -Acuity Knowledge Centre (India) (P.) Ltd. v. DCIT: [2026] 182 taxmann.com 114 (Bangalore - Trib.) -BancTec TPS India (P.) Ltd. v. ACIT: [2019] 108 taxmann.com 109 (Mumbai Trib.)" 8. Ld. Departmental Rep....
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....iven cognizance to the same and proceeded to reject the comparable quoting non availability of annual report. Copy of the annual reports of Starlineps Enterprises Ltd. is at pages 345 to 356 of the paperbook which was filed before the TPO vide submission dated August 30, 2022 at page 498 of the paperbook. * Availability of annual report in public domain and clarification on name appearing in the annual report: The Appellant submits that the TPO may have not considered the annual report of the company because the name appearing on its financial statement is L'avance Dirays Limited. In response, the Appellant submitted certificate of incorporation, in which it has been stated that Starline was originally incorporated as L'avance Dirays Limited (Refer page 357 and 358 of Paper Book). * Functional comparability engaged in trading of diamonds: The Appellant would like to submit that Starline is engaged in trading of luxury goods viz. polished diamonds and has earned 100% of revenue from the said business. (Refer page 353 of Paper Book). It is pertinent to note that the Appellant is also engaged in trading of jewelry and diamonds. Hence, Starline can be consider....