9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (5) TMI 1515 - AT - Income TaxTP Adjustment - comparable selection - Maveric System Ltd. in the software segment as it is a loss making company and failed to export filter - HELD THAT - We do not find merit in this contention raised on behalf of the Revenue i.e. the company is a loss making company for the last 3 years. This company is profit making company for the financial year 2009-10 therefore it cannot be said that this company is loss making company in the last 3 preceding financial years. Accordingly the contention raised on behalf of the Revenue that it is continuous loss making company for last 3 financial years cannot be accepted. As regards to the another contention of the Revenue that the said company failed to meet the filter of 75% export to the total turnover it is clear that from the financial results shown in the Schedule 10 to the Balance Sheet at page no.564 of the Paper Book the total turnover of the company is Rs.56, 90, 13, 529/- out of which the domestic turnover is only Rs.13, 73, 08, 982/- and export turnover is Rs.43, 17, 04, 547/- which constitutes 76.78% of the total turnover clearly meets the filter of 75% of export to total sales. In view of this fact we do not find any merit in the grounds of appeal no.1 raised by the Revenue. Accordingly the ground of appeal no.1 stands dismissed. India Tourism Development Corporation Ltd. as comparable in the business support services segment - Revenue is seeking exclusion of this company on the ground that it is loss making company and also failed to meet export filter. This company was rejected by the TPO from the set of comparables on the ground of functionality differences - Admittedly this is a Government of India company and this company is not comparable with that of the respondent-assessee company which is a pure private company as Govt. company is not driven by profit motive alone but other consideration also weigh in such as discharge of social obligation etc. as held in the case of CIT vs. Thyssen Krupp Industries India (P.) Ltd. 2016 (4) TMI 88 - BOMBAY HIGH COURT . Thus it is not a comparable. In the circumstances it is not necessary for us to advert to other contentions raised seeking exclusion of this company by the Revenue. Accordingly we direct the Assessing Officer/TPO to exclude this company from the list of comparables in respect of business support services segment. Appeal filed by the Revenue stands partly allowed.
Issues Involved:
1. Inclusion of Maveric Systems Ltd. as a comparable. 2. Inclusion of Caliber Point Business Solutions Ltd. and BNR Udyog Ltd. as comparables. 3. Ignoring the reliance on the ITAT Bangalore decision in Kodiak Network (India) Pvt Ltd. 4. Inclusion of Caliber Point Business Solutions Ltd. despite different financial year. 5. Inclusion of Caliber Point Business Solutions Ltd. despite being a loss-making company. 6. Inclusion of KLAS Information Systems Ltd. and Mindtree Ltd. as comparables. 7. Inclusion of R System International Ltd. despite different financial year. 8. Inclusion of Silverline Technologies Pvt Ltd. despite functional differences. 9. Inclusion of India Tourism Development Corporation Ltd. as a comparable. Detailed Analysis: 1. Inclusion of Maveric Systems Ltd. as a comparable: The Revenue contended that Maveric Systems Ltd. should not be included as a comparable because it is a loss-making company and fails the export filter. However, the Tribunal found that Maveric Systems Ltd. made a profit of Rs. 609.53 lakhs in the financial year 2009-10, thus it cannot be considered a continuous loss-making company. Additionally, the company met the export filter as its export turnover constituted 76.78% of the total turnover. Therefore, the Tribunal dismissed the Revenue's contention and upheld the inclusion of Maveric Systems Ltd. as a comparable. 2. Inclusion of Caliber Point Business Solutions Ltd. and BNR Udyog Ltd. as comparables: The Tribunal noted that once the inclusion of Maveric Systems Ltd. was upheld, the consideration received would still be within the arm’s length price. Consequently, the Tribunal found it unnecessary to adjudicate the inclusion of Caliber Point Business Solutions Ltd. and BNR Udyog Ltd. as comparables. These grounds were dismissed as withdrawn/not pressed. 3. Ignoring the reliance on the ITAT Bangalore decision in Kodiak Network (India) Pvt Ltd.: This issue was not separately addressed in detail as the Tribunal found it unnecessary to adjudicate the grounds related to the inclusion of certain comparables once the inclusion of Maveric Systems Ltd. was upheld. 4. Inclusion of Caliber Point Business Solutions Ltd. despite different financial year: Similarly, this issue was not separately addressed in detail for the same reason as above. 5. Inclusion of Caliber Point Business Solutions Ltd. despite being a loss-making company: This issue was also not separately addressed in detail for the same reason as above. 6. Inclusion of KLAS Information Systems Ltd. and Mindtree Ltd. as comparables: This issue was not separately addressed in detail as the Tribunal found it unnecessary to adjudicate these grounds once the inclusion of Maveric Systems Ltd. was upheld. 7. Inclusion of R System International Ltd. despite different financial year: This issue was not separately addressed in detail for the same reason as above. 8. Inclusion of Silverline Technologies Pvt Ltd. despite functional differences: This issue was also not separately addressed in detail for the same reason as above. 9. Inclusion of India Tourism Development Corporation Ltd. as a comparable: The Revenue sought the exclusion of India Tourism Development Corporation Ltd. on the grounds that it is a loss-making company and fails the export filter. However, the Tribunal noted that this company is a Government of India entity, and government companies are not driven by profit motives alone but also by social obligations. As held by the Hon’ble Bombay High Court in CIT vs. Thyssen Krupp Industries India (P.) Ltd., government companies are not comparable to private companies. Therefore, the Tribunal directed the exclusion of India Tourism Development Corporation Ltd. from the list of comparables in respect of the business support services segment. Conclusion: The appeal filed by the Revenue was partly allowed. The Tribunal upheld the inclusion of Maveric Systems Ltd. as a comparable and directed the exclusion of India Tourism Development Corporation Ltd. from the list of comparables in the business support services segment. Other grounds were dismissed as withdrawn/not pressed.
|
