2019 (10) TMI 202 - HC - Income Tax

TP Adjustment - comparable selection - DRP held that M/s Basiz Fund Services Private Limited was not appropriate for the purpose of comparison, on account of functional dissimilarity - HELD THAT - Tribunal held the finding of the DRP that the company M/s Basiz Fund Services Private Limited is functionally dissimilar to the assessee, is founded on the circumstances that the said company is involved in fund accounting services; it possesses significant intangible assets, and; it had different employees profile, which resulted in significant growth at 57.61% and earning of profits at 46.75% at supernormal level. Even if the supernormal level of profit at 46.75% were not to be considered as a reason to treat the said enterprises as not comparable, the fact remains that the Tribunal concurred with the view of the DRP on functional dissimilarity. Aforesaid being the position, in our view, no question of law arises.

Summary

Issues: Delay in re-filing appeal, Assessment year 2009-10, Functional dissimilarity of enterprises, Question of law

Delay in re-filing appeal:
The appellant sought condonation of a 287-day delay in re-filing the appeal. The court, considering the delay for re-filing, decided to condone the delay, leading to the disposal of the application.

Assessment year 2009-10:
The appellant appealed against the order passed by the Tribunal in ITA No. 1206/Del/2014 for the assessment year 2009-10. The appeal was to challenge the deletion of M/s Basiz Fund Services Private Limited from the list of comparable enterprises by the DRP. The DRP based its decision on functional dissimilarity between the entities.

Functional dissimilarity of enterprises:
The DRP found M/s Basiz Fund Services Private Limited to be functionally dissimilar to the assessee due to its involvement in fund accounting services, possession of significant intangible assets, and a different employee profile resulting in substantial growth and supernormal profits. The Tribunal upheld the DRP's decision on functional dissimilarity, leading to the dismissal of the appeal.

Question of law:
The court concluded that no question of law arose in the appeal as both the DRP and the Tribunal had returned concurrent findings of fact regarding the functional dissimilarity of the enterprises. Consequently, the appeal was dismissed based on the established facts and lack of legal issues to be addressed.

This comprehensive analysis of the judgment addresses the issues of delay in re-filing the appeal, the specific assessment year involved, the functional dissimilarity of enterprises, and the absence of a question of law for consideration in the appeal.