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2014 (4) TMI 814 - AT - Income TaxRectification of order Error apparent on the record u/s 254 of the Act - Disallowance of deduction u/s 10A of the Act - Held that - Relying upon The Commissioner of Income Tax-2. Versus Western Outdoor Interactive Pvt. Ltd. 2012 (8) TMI 709 - BOMBAY HIGH COURT - In case there is no change in the facts and circumstances subsequent to the first year, which could have rendered the assessee ineligible for deduction under section 10A, the claim of the assessee cannot be denied in the subsequent assessment year when the same is accepted in the first assessment year the direction for remitting back the case to the AO will not affect the claim of the assessee if there is no change in the facts and circumstances - the assessee has not made out a case of apparent error which can be rectified u/s 254(2) of the Income tax Act Decided against Assessee. Transfer pricing adjustment Selection of comparables Held that - The issue has been remanded to the record of AO/TPO to consider the segmental results - If the assessee has any doubt about the reliability of the data/details, then it would have been raised before the TPO/AO - the issue has been remanded for considering the segmental results and related party transactions in ITES segment, then there was no substance in the submission of the assessee Decided against Assessee. Comparability of Infosys and Wipro High turnover Held that - The finding has been given on examination and analysis of the facts and the assessee has not pointed out in the miscellaneous application any factual mistake in the facts which are considered by the Tribunal while giving the finding Relying upon H.A. Shah & Co. v. CIT 1955 (9) TMI 53 - BOMBAY HIGH COURT - if while deciding a case the First Tribunal did not have a particular material before it and if the second Tribunal is satisfied that if those material facts have been taken into consideration the decision of first Tribunal would have been different, it would justify the second Tribunal in not adhering to the decision of the first Tribunal thus, when the issue has been decided after considering certain vital facts which were not before the Co-ordinate Benches relied upon by assessee then taking a different view on the basis of new facts would not amount to taking a divergent view of the matter on same facts, material and aspects already considered - nothing has been brought on record by the assessee to show how the brand value has an influence on the margins in the case of the comparables - no quantitative details of the adjustment if any on account of brand value are given Decided against Assessee. Comparability of Maple-Esolution Ltd. Allegation of fraud against the director - Held that - It is clear from the finding of the Tribunal that the objection was found not relevant for the business of the companies and for the year Decided against Assessee. Comparability of Eclerx Services Ltd Held that - Once the issue has been decided by the Tribunal by holding that the company providing data processing and data analysis service is similar to the services of the assessee then it becomes irrelevant whether the assessee has raised the objection before the authorities below or not Decided against Assessee. Comparability of Mold Tex Technologies Ltd Tolerance range of related party transaction - Held that - It is clear from the finding of the Tribunal that the tolerance range of 15% was taken in the case of assessee by considering the various decisions of the Tribunal wherein this range has been considered from 0-25% - The assessee's grievance is against reasoning and view of the Tribunal and not against any error or mistake apparent on record Decided against Assessee. Justification of carrying out fresh search by the TPO Held that - The Tribunal has not taken any divergent view from the views in the other cases - when the TPO itself did not choose to carry out further search then issue of justification of TPO did not arise before the Tribunal thus, there was no substance in the arguments of the assessee Decided against Assessee. The scope of section 254(2) is very limited and circumscribed - For exercising jurisdiction u/s 254(2) it is mandatory condition that such mistake should be vide apparent manifest, and patent on record and not something which involve serious circumstances of disputes of question of fact or law - Section 254(2) does not confer power on the Tribunal to review its earlier order - the Tribunal has no power to review its order passed on merits and in the garb of rectification of mistake no order can be passed u/s 254(2) which amounts to reversal of order passed after discussing all facts and statutory provisions in detail Decided against Assessee.
Issues Involved:
1. Disallowance of deduction under section 10A of the Income Tax Act. 2. Transfer pricing issues, including inclusion/exclusion of certain comparable cases. 3. Justification of carrying out a fresh search by the Transfer Pricing Officer (TPO). Issue-wise Detailed Analysis: 1. Disallowance of Deduction under Section 10A: The assessee filed a miscellaneous application to rectify mistakes in the Tribunal's order regarding the disallowance of deduction under section 10A for the Vikroli Unit. The assessee argued that the deduction was allowed in earlier assessment years and should not be disallowed in subsequent years without a change in facts and circumstances. The Tribunal had remanded the issue to the Assessing Officer (AO) for verification of new facts regarding the consolidation of two units. The Tribunal maintained that if there were no changes in the facts and circumstances, the deduction could not be denied. However, the Tribunal found no apparent error in its order and dismissed the assessee's application. 2. Transfer Pricing Issues: - Inclusion/Exclusion of Comparable Cases: - Asit C. Mehta Financial Services Ltd.: The Tribunal had remanded the issue to the AO/TPO to reconsider the segmental results and related party transactions. The Tribunal found no substance in the assessee's submission and upheld its earlier decision. - Infosys and Wipro: The Tribunal addressed the issue of turnover filter and brand value. It concluded that turnover alone does not influence operating margins and that there is no direct relation between turnover and margin in the services sector. The Tribunal found no apparent error in its analysis and dismissed the assessee's application. - Maple Esolution Ltd.: The Tribunal rejected the assessee's objection based on allegations of fraud against the directors, stating that these allegations were unrelated to the company's business activities. The Tribunal upheld its earlier decision. - Eclerx Services Ltd.: The Tribunal considered the functional comparability of Eclerx Services Ltd. and found that the company providing data processing and data analysis services was functionally similar to the assessee. The Tribunal dismissed the assessee's application. - Mold Tex Technologies Ltd.: The Tribunal remanded the issue to the AO/TPO for verification of the merger event and its impact on functional comparability. The Tribunal clarified its earlier findings and dismissed the assessee's application. - Tolerance Range of Related Party Transactions: The Tribunal considered various decisions and concluded that a 15% tolerance range for related party transactions was appropriate in the assessee's case. The Tribunal found no apparent error in its decision and dismissed the assessee's application. 3. Justification of Carrying Out Fresh Search by TPO: The assessee challenged the TPO's authority to carry out a fresh search for comparables after accepting eight comparables selected by the assessee. The Tribunal held that the TPO has the jurisdiction to gather and consider all relevant information for determining the Arm's Length Price (ALP). The Tribunal found no restriction on the TPO's power to carry out a fresh search and upheld its earlier decision. The Tribunal dismissed the assessee's application, stating that the issue was decided based on the relevant provisions and facts. Conclusion: The Tribunal dismissed the assessee's miscellaneous application, finding no apparent errors or mistakes in its earlier order. The Tribunal emphasized that the scope of section 254(2) is limited to rectifying obvious, manifest, and patent mistakes and does not allow for a review of the order on merits. The Tribunal also criticized the assessee for filing a frivolous application and causing wastage of the court's time.
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