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TMI Blog2015 (9) TMI 1476X X X X Extracts X X X X X X X X Extracts X X X X ..... learned Counsel for the assessee to be correct. In view of the aforesaid, as we have directed the Transfer Pricing Officer to include CG–Vak Software and Exports Ltd. as a comparable, by virtue of which assessee’s margin comes within the range of 5% of average arithmetic mean of comparables requiring no further adjustment, there is no need to adjudicate the other grounds relating to selection / rejection of comparables as well as risk and working capital adjustment raised by the assessee as they are of mere academic interest. However, we leave the issue raised in these grounds open for adjudication if they arise in future in any other assessment year. Short credit of TDS while computing the tax liability - Held that:- We cannot direct the Assessing Officer to give tax credits to the assessee without verifying the factual details. However, considering the fact that assessee has filed petition under section 154 of the Act before the Assessing Officer raising the aforesaid issues which is still pending, we direct the Assessing Officer to consider assessee’s petition under section 154 of the Act on merits and in accordance with law. - IT(TP)A no.943/Mum/2015 - - - Dated:- 30-9-201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsfer Pricing Officer, however, did not find the T.P. study of the assessee acceptable. He was of the view that the assessee has wrongly selected some of the comparables whereas some of the comparables which were functionally similar to the assessee have been omitted. He, therefore, rejecting the transfer price study of the assessee proposed to include some companies as comparable which, according to him, were functionally similar to the assessee. Though the assessee objected to such action of the Transfer Pricing Officer but the Transfer Pricing Officer rejecting the objections of the assessee, undertook a search process himself and selected fresh set of comparables by using contemporaneous data, which also included certain comparables selected by the assessee. In the process, the Transfer Pricing Officer rejected some of the comparables selected by the assessee while including certain new comparables. The final comparable selected by the Transfer Pricing Officer were 17 in number with arithmetic mean PLI of 20.88%. By applying the arithmetic mean PLI of comparables at 20.88%, the arm's length price of international transaction was determined at ₹ 337,95,54,521 as agains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 19.94% 5. Mindtree Limited 20.79% 6. Sasken Communication Technologies Limited 26.53% 7. Zylog Systems Limited 19.08% 8. LGS Global Limited 10.21% Average 21.04% 5. Of course, the DRP also passed some directions on other corporate issues with which we are not concerned at present. In terms with the direction of the DRP, the impugned assessment order was passed. Being aggrieved, the assessee is in appeal before us raising as many as 23 grounds: 6. Grounds no.1 and 2, being general in nature, do not require any specific adjudication. 7. The learned Counsel for the assessee submitted before us that he does not want to press grounds no.3, 4, 5 and 11. In view of this, these grounds are dismissed as not pressed . Learned Counsel for the assessee submitted, ground no.18 being of academic nature need not be adjudicated upon. Considering such submissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parable. For such proposition, the learned Counsel relied upon the following decisions: i) Techbooks Internationals Pvt. Ltd. v/s DCIT, ITA no.240/Del./2015, order dated 6th July 2015; ii) Nortel Networks India Pvt. Ltd. v/s ACIT, ITA no.4765/Del./2011 and ITA no.472/Del./2013, order dated 25th February 2014; and iii) CIT v/s Nortel Networks India Pvt. Ltd., ITA no.448 of 2015, order dated 24th February 2015 (Delhi High Court). 12. The learned Departmental Representative, on the other hand, strongly relying upon the reasoning of the DRP submitted before us, the turnover of CG Vak Software and Exports Ltd. is only ₹ 7.16 crores compared to assessee s huge turnover of ₹ 317 crores. He submitted, the assessee has also not indicated whether any other company selected by it is having lesser turnover than CG Vak Software and Exports Ltd.. The learned Departmental Representative submitted, though, there may be co relation between the turnover and profit but a relatively small company cannot be compared to a big company. As far as the decisions relied upon by the learned Counsel for the assessee, it was submitted by the learned Departmental Representative, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ationals Pvt. Ltd. (supra), while considering the comparability of the very same company for the same assessment year by applying the turnover filter, has observed in the following manner: 12.3.2 We do not find any reason to exclude this company from the list of comparables merely on the ground that its turnover is less. The reasons given above while considering the comparability of CG VAK Software and Exports apply to this company as well. We, therefore, order for the inclusion of this company in the list of comparables. However, the Transfer Pricing Officer is directed to verify the correctness of OP/OC of this company before its inclusion in the set of comparables. 14. Similarly, the Tribunal, Delhi Bench, again in Nortel Net Works India Pvt. Ltd. (supra), considering the issue relating to rejection of CG Vak Software and Exports Ltd. as a comparable on the very same reasoning held as under: 7. We have heard the rival contentions and perused the material available on record. Apropos Capital Trust comparable, the TPO has observed that primary business of this company is automobiles sales and service. We are of the considered view that a company cannot be exclude ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. as a comparable. Accordingly, we direct the Transfer Pricing Officer to include this company as comparable and determine the arm's length price. In the course of hearing, learned Counsel for the assessee submitted a working indicating the margin of comparables finally selected after including CG Vak Software and Exports Ltd. as comparable. It was submitted, if CG Vak Software and Exports Ltd. is included as a comparable, then the arithmetic mean of comparable companies would be 17.60% compared to assessee s 13.50%. Hence, there would be no need for further adjustment to the arm's length price, as assessee s margin would be within the tolerance band of 5%. Thus, he submitted, there will be no need to adjudicate other grounds on T.P. adjustment. On a perusal of the working submitted before us by the learned Counsel, we find the aforesaid submissions of learned Counsel for the assessee to be correct. In view of the aforesaid, as we have directed the Transfer Pricing Officer to include CG Vak Software and Exports Ltd. as a comparable, by virtue of which assessee s margin comes within the range of 5% of average arithmetic mean of comparables requiring no further adjustmen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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