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2024 (12) TMI 549 - AT - Income TaxTP Adjustment - comparable selection - HELD THAT - Empire Industries Limited - In view of the submission made by the Ld. AR, we find that this company is predominantly into trading activity and is not comparable to the assessee. Accordingly, we exclude this company from the list of comparable. India Cements - We are of the opinion that this company is not comparable with the assessee and therefore we exclude this company from the list of comparable companies. HSCC (India) Limited - The company, HSCC (India) Ltd. is primarily into construction contract activity. This company is compared with the profile of the assessee and it is clear that the assessee is comparable with the HSCC (India) Ltd. as the comparable company is also into back end services. While applying the TNMM method, this company is a comparable company with the assessee since the activities of this company are into primarily undertaking software services. Therefore in our opinion the functions of this company are similar to. Further we are of the opinion that merely the HSCC (India) Ltd. is an government undertaking that will not make it not comparable with the assessee. In view of the above, we disapprove the contention of the assessee and refuse to exclude this company from the list of comparables. Kitco Ltd. - Since in the present case, the profile of the comparable Kitco Ltd. is matching with that of the assessee and we do not find any infirmity in the order of Ld. CIT(A) and accordingly we reject the contention of the assessee to exclude this company. Not granting the additional deduction u/s.10AA claimed during the course of assessment proceedings on the amounts realised from export turnover subsequent to the filing the return of income - The entitlement of the assessee u/s. 10AA of the Act is required to examine in the light of the duty cast on the assessee to fulfil the requirements as contemplated u/s.10AA(8) r.w.s. 10A (4 5) of the Act. A concise reading of the provisions make it abundantly clear that the assessee was duty bound to file the Form no. 56F before the specified date referred to in section 44AB. However the assessee has filed the said form before us on 10.05.2024, which is filed much latter that the specified due date. In our view the delay in filing the Form no. 56F after the specified date is not permissible as held in the case of DCIT Vs. Wipro Ltd. 2022 (7) TMI 560 - SUPREME COURT wherein while deciding similar issue u/s 10B of the Act, the Hon'ble Supreme Court has held that for claiming the deduction, the statutory requirement of filing of forms is strictly complied with. Since admittedly, the Form no. 56F was not filed within the specified date, we do not find any merit in the argument of Ld. AR. Accordingly the Ground of the assessee s appeal is dismissed.
Issues Involved:
1. Exclusion of Comparable Companies in Transfer Pricing. 2. Corporate Tax Deduction under Section 10AA of the Income-tax Act. Detailed Analysis: 1. Exclusion of Comparable Companies in Transfer Pricing: The primary issue in this case revolves around the exclusion of certain companies as comparables in the transfer pricing analysis. The assessee contested the inclusion of Empire Industries Limited, India Cements Capital Limited, HSCC (India) Limited, and Kitco Limited as comparable companies by the Transfer Pricing Officer (TPO) and upheld by the Commissioner of Income Tax (Appeals) [CIT(A)]. - Empire Industries Limited: The assessee argued that Empire Industries is functionally dissimilar as it is engaged in manufacturing amber glass bottles, trading, and indenting services. The Tribunal found that Empire Industries is primarily involved in trading activities, which are not comparable to the assessee's service-oriented business. Therefore, Empire Industries was excluded from the list of comparables. - India Cements Capital Limited: The assessee contended that this company is a Non-Banking Financial Company (NBFC) providing financial services, which are not comparable to the assessee's business support services. The Tribunal agreed with the assessee, noting the functional dissimilarity and excluded India Cements from the comparables. - HSCC (India) Limited: The Tribunal upheld the inclusion of HSCC, noting that despite being a government company, its business activities in consultancy services are comparable to the assessee's support services. The Tribunal dismissed the argument that government companies cannot be comparables. - Kitco Limited: The Tribunal found that Kitco's consultancy services are similar to the assessee's business support services. Despite the assessee's argument regarding Kitco's involvement in construction contracts, the Tribunal retained Kitco as a comparable. 2. Corporate Tax Deduction under Section 10AA: The second issue pertains to the denial of additional deduction under Section 10AA of the Income-tax Act for export proceeds realized after the filing of the return. The assessee claimed an additional deduction of Rs. 18,71,030, which was disallowed by the Assessing Officer (AO) and CIT(A) on the grounds that the export proceeds were not realized within the prescribed time. - The Tribunal examined the provisions of Section 10AA and noted that there is no explicit time limit for the realization of export proceeds. The Tribunal referred to the decision in the case of Uni Design Jewellery Pvt. Ltd., which held that the deduction under Section 10AA should be allowed if the export proceeds are ultimately realized. - However, the Tribunal also considered the procedural requirement of filing Form 56F within the specified time. The Tribunal referred to the Supreme Court's decision in DCIT Vs. Wipro Ltd., emphasizing the mandatory nature of procedural compliance for claiming deductions. - In this case, since the assessee failed to file Form 56F within the specified time, the Tribunal denied the additional deduction under Section 10AA, following the Supreme Court's precedent. Conclusion: The Tribunal partly allowed the appeal for statistical purposes, excluding certain companies from the list of comparables in the transfer pricing analysis, while denying the additional deduction under Section 10AA due to procedural non-compliance. The decision underscores the importance of functional comparability in transfer pricing and strict adherence to procedural requirements for tax deductions.
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