9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2017 (5) TMI 1728 - AT - Income TaxTP Adjustment - Comparable selection - Kals Information Systems Ltd. - HELD THAT - Once inventory was there it cannot be said that Kals Information Systems Ltd. was not having any revenue from products. DR has submitted that the principal items do not contain any item code number. This information is only with reference to principal products and not with reference to the entire spectrum of products/services dealt by the company. Consistent with the decisions relied upon by the assessee we direct for the exclusion of company. Denial of working capital adjustment - The reason for denial is that the assessee had not submitted the details as has been observed by ld. TPO in para 7.1 of his order. Assessee had made submissions in this regard before the ld. DRP in regard to all the four comparables selected by ld. DRP. We therefore restore this issue to the file of ld. TPO to consider the information furnished by the assessee in regard to its claim for working capital adjustment. Assessee appeal allowed for statistical purposes.
Issues Involved:
1. Condonation of delay in filing the appeal. 2. Inclusion of Kals Information Systems Ltd. as a comparable for determining the ALP of the international transaction. 3. Non-grant of working capital adjustment. Issue-wise Detailed Analysis: 1. Condonation of Delay in Filing the Appeal: The appeal was filed 148 days late, and the assessee sought condonation of this delay. The assessee explained that they initially chose not to appeal to avoid long litigation costs but later realized that not appealing might prejudice their tax-related cases pending in other forums. The Tribunal referred to the Hon'ble Bombay High Court's decision in Prima Paper & Engg. (P) Ltd. v. CIT, which emphasized that "sufficient cause" should be liberally construed to advance substantial justice. The Tribunal noted that the same issue permeated through all years and that the adverse finding for one year should not prejudice the assessee's claim for other years. Consequently, the Tribunal condoned the delay in filing the appeal. 2. Inclusion of Kals Information Systems Ltd. as a Comparable: The assessee contested the inclusion of Kals Information Systems Ltd. in the list of comparables for determining the ALP of the international transaction related to software development. The assessee argued that Kals Information Systems Ltd. derived revenue from software products and training, unlike the assessee, which only provided software development services. The Tribunal referred to several decisions, including Toluna India (P) Ltd. v. Asstt. CIT and Cincom Systems India (P.) Ltd. v. ACIT, which directed the exclusion of Kals Information Systems Ltd. due to its involvement in software products and training. The Tribunal observed that the revenue recognition statement and financial statements indicated that Kals Information Systems Ltd. dealt in products. Consistent with the cited decisions, the Tribunal directed the exclusion of Kals Information Systems Ltd. from the list of comparables. 3. Non-Grant of Working Capital Adjustment: The assessee was aggrieved by the non-grant of working capital adjustment. The TPO had rejected the working capital adjustment claim, stating that the assessee had not furnished any computation or demonstrated that the difference in working capital deployed affected the margins. The Tribunal noted that the assessee had made submissions regarding working capital adjustment before the DRP. The Tribunal restored the issue to the TPO to consider the information furnished by the assessee regarding its claim for working capital adjustment. The Tribunal allowed this issue for statistical purposes. Conclusion: The Tribunal condoned the delay in filing the appeal, directed the exclusion of Kals Information Systems Ltd. from the list of comparables, and restored the issue of working capital adjustment to the TPO for reconsideration.
|
