2015 (10) TMI 2626 - HC - Income Tax

TPA - exclusion of two companies Cosmic Global Limited ( CGL ) and Accentia Technologies Limited ( ATL ) from the list of comparables for the purposes of determining the arm s length price ( ALP ) of the international transaction of provision of ITES involving the Respondent Assessee - Held that - One reason for exclusion of CGL was that it had outsourced its major activities whereas the Assessee was doing the business in-house. As far as ATL is concerned, it was noticed that there was merger of some other entity with it and, therefore, the said company could not be considered as a comparable. The submission of learned counsel for the Revenue is that both these companies were included in the Assessee s own list of selected entities and the demand for the exclusion was made only before the ITAT. Be that as it may, the Court is of the view that the order of the ITAT in so far as it concerns the exclusion of the above entities from the list of comparables does not give rise to any substantial question of law which requires consideration by the Court.

Summary

Issues: Revenue's appeal against exclusion of two companies from comparables list for determining arm's length price in an international transaction.

The High Court heard an appeal by the Revenue under Section 260A of the Income Tax Act, 1961, challenging the order of the Income Tax Appellate Tribunal (ITAT) dated 24th April 2015 for the Assessment Year 2009-10. The main grievance of the Revenue was the exclusion of two companies, Cosmic Global Limited (CGL) and Accentia Technologies Limited (ATL), from the list of comparables for determining the arm's length price (ALP) of an international transaction involving the Respondent Assessee. The ITAT had excluded CGL due to outsourcing major activities and ATL due to a merger with another entity, making it incomparable. The Revenue argued that these companies were included in the Assessee's own list of selected entities, and the demand for their exclusion was made only before the ITAT. However, the Court held that the ITAT's decision to exclude the entities did not raise any substantial question of law warranting the Court's consideration, leading to the dismissal of the appeal.

In summary, the High Court dismissed the Revenue's appeal against the exclusion of two companies, CGL and ATL, from the list of comparables for determining the arm's length price in an international transaction, as the Court found no substantial question of law arising from the ITAT's decision.