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2023 (7) TMI 897 - AT - Income TaxTP adjustment - comparable selection - exclusion of UPS Print Systems Ltd. and BNR Udyog Ltd. from the list of comparables for the purpose of determining the ALP of the international transactions - HELD THAT - Actually the AO issued a notice u/s 133(6) of the Act to M/s. Universal Print Systems Ltd. and no reply has been received from them. Having no option, he considered this company as comparable to the assessee company and included in the lists of comparables. In our opinion, the required information u/s 133(6) of the Act is not made available to the TPO, in such circumstances, T.P. adjustment on this count cannot be made reasonable or accurately made in this regard. Accordingly, this company is to be excluded from the list of comparable companies as reliance placed by this Tribunal while deciding this issue in decision of Zyme Solutions Pvt. Ltd. Vs. ACIT 2018 (11) TMI 1793 - ITAT BENGALURU . Thus we direct the AO/TPO to exclude Universal Print Systems Ltd. from the list of comparables. This ground is allowed. BNR Udyog Ltd.as fails RPT filter and also fails the functionality test - As decided in GTS E-SERVICES PRIVATE LTD. 2019 (7) TMI 296 - ITAT MUMBAI as this entity was engaged in medical transcription, medical coding and medical billing etc. thus medical transcription would not be, at all, functionally similar. Thus we direct the AO/TPO to exclude this company as it fails the functionality test since the assessee is engaged only in trading, distribution of laboratory products and chemicals, strategy sourcing, ITeS, etc. This ground is allowed.
Issues Involved:
1. Transfer Pricing (TP) Grounds 2. Corporate Tax Grounds Summary: Transfer Pricing (TP) Grounds: 1. Inclusion of Universal Print Systems Limited (UPS) as a Comparable: - The Tribunal remanded the issue of including UPS as a comparable to the Transfer Pricing Officer (TPO) for fresh adjudication. The Tribunal noted that UPS is functionally dissimilar to the assessee, primarily engaged in providing integrated print solutions rather than routine ITES services. The Tribunal directed the TPO to consider segmental data and apply filters at the segmental level, as per Rule 10B of the Income-tax Rules. The TPO was also instructed to use powers under Section 133(6) of the Act to gather required details from UPS. The Tribunal emphasized that if adjustments cannot be reasonably or accurately made, UPS should be excluded from the list of comparables. 2. Inclusion of BNR Udyog Ltd. as a Comparable: - The Tribunal remanded the issue of including BNR Udyog Ltd. as a comparable to the TPO. The Tribunal observed that the company is engaged in medical transcription, which is considered back-office services and not high-end KPO services. The Tribunal directed the TPO to reconsider the functional similarity and segmental data of BNR Udyog Ltd. The Tribunal also noted that if segmental information is available, filters should be applied at the segmental level. The Tribunal directed the AO/TPO to exclude BNR Udyog Ltd. if it fails the functionality test, as the assessee is engaged in trading, distribution of laboratory products and chemicals, strategy sourcing, and ITES. Corporate Tax Grounds: 1. Levy of Interest under Section 234A: - The Tribunal noted that the levy of interest under Section 234A is consequential. 2. Short Credit of Taxes Paid: - The Tribunal directed the AO to verify the assessee's claim of short credit of taxes paid amounting to INR 53,79,565 and to give credit of taxes in accordance with the law. Conclusion: The appeal by the assessee was partly allowed, with directions for fresh adjudication on the inclusion of UPS and BNR Udyog Ltd. as comparables, verification of short credit of taxes paid, and consequential levy of interest under Section 234A.
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