2023 (11) TMI 203 - HC - Income Tax

TP Adjustment - comparable selection/Deselection - selection criteria - HELD THAT - Tribunal not just followed the previous orders mentioned above to maintain consistency, but also examined the entire material on record to ascertain the comparability of each of the comparables with the case of the respondent/assessee pertaining to AY 2007-08. Appellant/revenue has not been able to demonstrate change, if any, in circumstances qua the respondent/assessee and/or any of the comparables in the financial year in question vis- -vis the earlier years. There is not even a whisper alleging any such change while calling upon fresh analysis of comparability. We have not been shown that the Tribunal committed any perversity in reaching the conclusion it reached in the matter. No substantial question of law.

Summary

Issues involved:
The issues involved in this case are:
1. Whether the Income Tax Appellate Tribunal (ITAT) was justified in directing to exclude certain comparables without appreciating the need for a case to case basis analysis u/s 92C of the Income Tax Act.
2. Whether the exclusion of M/s IM + Capital Ltd. and M/s Keynote Corporate Services Ltd. as comparables was correct and in compliance with Rule 10B(2) of the Income Tax Rules, 1962.

Issue 1:
The appellant/revenue challenged the ITAT's order regarding the exclusion of certain comparables without conducting a case to case basis analysis u/s 92C of the Income Tax Act. The ITAT had based its decision on the judgment of the High Court in the assessee's own case for AY 2007-08 to 2009-10. The appellant argued that the selection of comparables should be done on a case to case basis, considering the assessee's specific functions, assets, and risk analysis. The respondent/assessee contended that the appeal lacked merit as no legal question was raised.

Issue 2:
The ITAT excluded M/s IM + Capital Ltd. and M/s Keynote Corporate Services Ltd. as comparables. The appellant/revenue contended that the exclusion of these comparables was not in compliance with Rule 10B(2) of the Income Tax Rules, 1962. The ITAT's decision was based on the comparability of each of the comparables with the case of the respondent/assessee for AY 2007-08. The appellant failed to demonstrate any change in circumstances regarding the comparables or the respondent/assessee for the financial year in question compared to previous years. The Court found no substantial question of law involved in the appeal and dismissed it.

This judgment addresses the issues raised by the appellant/revenue regarding the exclusion of comparables and the application of Rule 10B(2) of the Income Tax Rules, 1962. The Court upheld the ITAT's decision based on a case to case basis analysis and consistency with previous orders.