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TMI Blog2015 (7) TMI 241X X X X Extracts X X X X X X X X Extracts X X X X ..... the arithmetical mean price falls beyond +/- 5% from the price charged in the international transactions, then the assessee does not have any option referred to in Section 92C(2) of the Act. Thus, as per the above amendment, it is clear that the +/- 5% variation is only to justify the price charged for international transactions and not for adjustment purposes. The aforesaid amendment brought about by Finance Act, 2012 has settled the issue and accordingly the 5% standard deduction benefit is not allowable to assessees. Thus the decision of the learned CIT(A) in the impugned order on this issue is reversed. - Decided in favour of revenue. - I.T. (T.P) A. No.431/Bang/2012, C.O.No.30/Bang/2015 - - - Dated:- 10-4-2015 - SHRI RAJPAL YADAV AND SHRI JASON P. BOAZ, JJ. For The Assessee : Shri Padamchand Khincha, C.A. For The Revenue : Dr. P.K. Srihari, Addl. CIT (D.R) ORDER Per Shri Jason P. Boaz : This appeal by the Revenue and Cross Objections by the assessee are directed against the order of the Commissioner of Income Tax (Appeals)-IV, Bangalore dt.24.1.2012 for Assessment Year 2007-08. 2. The facts of the case, briefly, are as under :- 2.1 The a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Oil Field Instrumentation (India) Ltd. 76.46 6 Celestial Labs Ltd. 58.35 Average 37.15 The TPO vide order under Section 92CA of the Act dt.5.4.2010 has proposed a T.P. Adjustment of ₹ 35,82,199 to the ALP of international transactions entered into by the assessee in the period relevant to Assessment Year 2007-08. The Assessing Officer determined the income of the assessee at ₹ 8,89,18,657 which included the T.P. Adjustment of ₹ 35,82,179 under Section 92CA of the Act vide assessment order passed under Section 143(3) of the Act dt.11.1.2011. 2.3 Aggrieved by the order of assessment for Assessment Year 2007-08 dt.11.1.2011, the assessee preferred an appeal before the CIT (Appeals) IV, Bangalore. The learned CIT(A) in his order held that out of the 6 comparable companies chosen by the TPO, three of them i.e. Oil Field Instrumentation India Ltd., Celestial Bio Labs, Ltd., and Agile Electric Technologies Pvt. Ltd. cannot be treated as comparable to the assessee as they are functionally different and according ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... impugned orders of the learned CIT(A) in excluding M/s. Oil Field Instrumentation India Ltd., Celestial Labs, Ltd., and Agile Electric Technologies Pvt. Ltd. from the list of comparables on the grounds that the these companies are functionally different and that the third company also has Related Party Transactions ( RPT ). 5.2 The relevant findings of the learned CIT(A) while excluding these three companies form the list of comparables is extracted hereunder from the impugned order of the learned CIT(A) :- 5.2.1 At para 2.7 (pages 14 15) in respect of M/s. Oilfield Instrumentation India Ltd., the learned CIT(A) held as under :- Having heard the contention of the appellant, and on perusal of the finding given by the Transfer Pricing Officer, it is an undisputed fact that the above company is predominantly engaged in mud logging services which have been treated as comparable to the R D services carried out by the appellant. The Hon'ble ITAT Mumbai while deciding the above comparable in the decision quoted (supra) held that the extracts of the functional profile of Oil Field form its website as given above and the information in the annual report of Oil Field on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re similar to the decision of the Hon'ble ITAT Mumbai and therefore the Assessing Officer is directed to exclude the above company form the comparables. 5.2.3 At para 2.7 (page 18) in respect of M/s. Agile Electric Technologies Pvt. Ltd., the learned CIT(A) held as under :- Having heard the contention of the appellant, there is no justification to retain the comparables which have related party transactions considering the fact as per sub-Rule (3) of Rule 10B an uncontrolled transaction shall be comparable to an international transaction and according to clause (a) of Rule 10A, the uncontrolled transaction means a transaction between enterprise other than Associate Enterprise . Hence, the controlled transactions cannot be considered for the comparability analysis. The Hon'ble ITAT, Bangalore in the case of Philips Software Centre Pvt. Ltd. Vs. ACIT (26 SOT 226) held that in view of Rule 10A(a), a company having related party transactions cannot be considered as comparable company. This view also finds support from the decision of Hon'ble ITAT Delhi in the case of Mentor Graphics (Noida) Pvt. Ltd. Vs. DCIT in ITA No.1969/D/2006, contrary to that in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above company from the comparable. 5.2.4 The learned CIT(A) has rejected the aforesaid three companies from the list of comparables based on functional differences vis-a-vis the assessee also relying on the decision of the ITAT, Mumbai Bench in the case of Tevapharm India Pvt. Ltd. in ITA No.6623/Mum/2011 for Assessment Year 2007-08 wherein these three companies were rejected as comparables in respect of an R D Service Provider. Before us, no material evidence has been brought on record by revenue to justify the inclusion of these three companies in the list of comparables. 5.2.5 We also find that co-ordinate benches of this Tribunal in the cases of Apotex Research Pvt. Ltd. V DCIT in ITA No.918/Bang/2011 dt.23.11.2012 for Assessment Year 2007- 08 and in Millipore India Pvt. Ltd. in IT(TP)A No.689/Bang/2012 dt.4.7.2014 for Assessment Year 2007-08, after considering the functional profile of M/s. Oil Field Instrumentation India Ltd. and M/s. Celestial Bio Labs Ltd. held that these two companies cannot be treated as comparables for an R D Service Provider. 5.2.6 In this view of the matter, following the findings in the decision of the Tribunal Benches in the cases of Tevap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowable to assessees. In this view of the matter, the decision of the learned CIT(A) in the impugned order on this issue is reversed. Consequently, Ground No.6 raised by Revenue is allowed. 7. In the result, Revenue s appeal for Asst. Year 2007-08 is partly allowed. 8. ORDER ON THE PETITION FOR CONDONATION OF DELAY IN FILING THE CROSS OBJECTIONS (C.O. No.30/Bang/2015) 8. The facts of the matter, briefly, are as under :- 8.1 The impugned order of the CIT (Appeals) IV, Bangalore for Assessment Year 2007-08 dt.24.1.2012 was admittedly served on the petitioner on 24.1.2012. Revenue filed its appeal before this Tribunal on 28.3.2012 and the information pertaining to the filing of Revenue s appeal was intimated to the petitioner on 5.12.2014. In these circumstances, the petitioner ought to have filed the C.O. on or before 30 days from the receipt of notice i.e. on or before 4.1.2015, but the same was filed on 17.3.2015; thereby leading to a delay of 72 days in filing the C.O. 8.2 Along with the C.O., the petitioner has filed a petition for condonation of delay in filing the C.O. accompanied by an Affidavit dt.13.3.2015 sworn to by the Managing Director of the Petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Transfer Pricing Officer in : a. performing fresh transfer pricing analysis; and b. performing the transfer pricing analysis without making proper adjustment for enterprise level, transactional level differences and risk differentials between the Respondent and the comparable companies. PRAYER 4. On an overall consideration of the facts of the case, and the law applicable, the ALP as determined by the Transfer Pricing Officer, as adopted by the Assessing Officer and as modified by the CIT (Appeals) to the extent being prejudicial to the respondent being not correct is to be quashed and the figures as determined and returned by the respondent being correct are to be accepted. 10. The Grounds in C.O. at S.Nos.1, 2 (a), 3 and 4 being general in nature and not being specifically urged before us, no adjudication is called for thereon and these grounds are accordingly dismissed as infructuous. 11. In respect of the Ground No.2(b), the learned Authorised Representative has only raised the issue of inclusion of Max Neema Medical International Ltd., based on the decision of the co-ordinate bench of the ITAT, Bangalore in the case of Apotex Research Pvt. Ltd. in ITA No.918 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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