9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2013 (12) TMI 4 - AT - Income TaxTransfer pricing adjustments - Held that - Following Global Vantedge Pvt. Ltd. Vs. DCIT 2009 (12) TMI 668 - ITAT DELHI - The total adjustments made together with the ALP already reported cannot exceed the total revenue earned by the appellant and its AEs from third party independent clients - The essential purpose of TP litigation is only to protect the legitimate tax base of India from being shifted out - It cannot mandate an assessee to earn more than what is has actually earned from independent third parties - Adjustments cannot exceed the global profits earned by the group from those transactions that it has allowed the assessee s ground with regard to restricting TP adjustment to the global profits of the group from the international transactions - Decided in favour of assessee. Selection of comparables - Held that - Once the assessee has accepted the aforesaid company as a comparable by not raising any objection before the DRP, the issue attained finality so far as the selection of the aforesaid comparable is concerned. The assessee cannot be permitted to raise objection - The assessee has not shown any reasonable cause as to why it did not object to the said company before the DRP - Decided against assessee. Differential ALP adjustment - Held that - The assessee has not raised this issue before DRP, we are not inclined to entertain this issue raised for the first time before us without there being a valid reason by the assessee to show the reason for not raising this issue before DRP - Decided against assessee.
Issues Involved:
1. Transfer Pricing Adjustment 2. Selection of Comparables 3. Rejection of Certain Comparables 4. Application of Differential ALP Adjustment 5. Claim of Deduction under Section 10A 6. Computation of Interest under Section 234B Issue-wise Detailed Analysis: 1. Transfer Pricing Adjustment: The assessee, engaged in providing testing services, filed its return declaring an income of Rs.70,19,691/- under normal provisions and book profit of Rs.6,94,02,058/- under section 115JB. The TPO rejected the assessee's TP study and selected 15 comparables, leading to an adjustment of Rs.14,29,00,905/-. The DRP directed that adjustments should not exceed the global profits earned by the group from those transactions, following the ITAT Delhi bench's decision in Global Vintage Pvt. Ltd. The final assessment order added Rs.10,12,67,762/- as a transfer pricing adjustment. 2. Selection of Comparables: The TPO selected certain companies as comparables which the assessee objected to: - Avani Cincom Technologies: The assessee argued it engaged in product sales and services, lacking appropriate segmental break-up. The Tribunal rejected the objection as it was not raised before the DRP. - Infosys Limited & Wipro Limited (Segment): The Tribunal directed their exclusion due to high turnover, brand value, economies of scale, and owning intangibles, making them non-comparable to the assessee. - KALS Information Systems Limited: The Tribunal excluded it as it was engaged in software product development, following decisions from other ITAT benches. 3. Rejection of Certain Comparables: The assessee's selected comparables were rejected by the TPO: - ICRA Techno Analytics Limited, Aditya Birla Minacs IT Services Ltd., Aditya Birla Minacs Technologies Ltd., CG-VAK Software and Exports Limited, Indium Software (India) Limited, Thinksoft Global Services Limited: The Tribunal dismissed the objections as the assessee did not raise them before the DRP. 4. Application of Differential ALP Adjustment: The assessee contended that the TP adjustment should be restricted to the extent of transactions with AE (93%). The Tribunal dismissed this ground as it was not raised before the DRP. 5. Claim of Deduction under Section 10A: The assessee raised various issues regarding the claim of deduction under section 10A. The Tribunal dismissed these grounds as they were not raised before the DRP and no reasonable cause was shown for their consideration at this stage. 6. Computation of Interest under Section 234B: The Tribunal noted that the levy of interest under section 234B is mandatory and consequential. Since the computation of ALP was directed to be done afresh, the issue of charging interest under section 234B was not adjudicated. Conclusion: The appeal was partly allowed for statistical purposes, directing the Assessing Officer/TPO to compute the arms length price afresh in conformity with the Tribunal's observations. The order was pronounced in the open court on 22.11.2013.
|
