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TMI Blog2017 (11) TMI 385X X X X Extracts X X X X X X X X Extracts X X X X ..... ich pertains to F.Y. 2004-05." 3. The appellant craves, leave or reserving the right to amend modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal. 2. At the outset, we would like to mention that the assessee was issued notice for hearing on 17/10/2017 and which was served through Departmental Representative, however, on the date of hearing neither the assessee appeared nor any Authorized Representative of the assessee attended. No written submission was either filed by the assessee. We also note from the record that on earlier occasions notice for hearing was sent through registered ports as well as served through Departmental Representative but no compliance was made on behalf of the assessee. It is evident that the assessee is not interested in prosecuting the appeal. We are of the opinion that sending again one more notice to the assessee would not serve any purpose, and accordingly the appeal was heard ex parte qua the assessee. 3. Facts in brief of the case are that the assessee company was incorporated under Indian Companies Act, 1956 as a wholly-owned subsidiary of 'Vertex India Ltd UK', which in turn was held jo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... age OP/TC margin was determined at 11.60%. Further, in view of the claim of capacity utilization adjustment, the assessee computed its OP/TC at 13.80%. Further, the assessee mentioned that it re-negotiated its commercial arrangement with its AE, who agreed for an increase in the service fee for the services rendered by the company in the year under consideration and, therefore, as a result of negotiation, the assessee in financial year 2006-07 received an additional amount of Rs. 10,26,67,942/- for the services rendered corresponding to financial year 2004-05 i.e. the year under consideration. The assessee recomputed OP/TC ratio at 26.2% after taking into consideration additional remuneration fee received pertaining to the period under consideration and also after making adjustment for excess capacity. It was mentioned by the assessee that this profit margin being more than arm's length margin of 11.06% earned by the comparables, the international transactions with its AEs were at arm's length. 3.3 The ld. TPO rejected the claim of adjustment for not utilization of excess capacity and claim of working capital adjustment. The ld. TPO also excluded the additional service fee amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ie. the appellant. In view of this, this company needs to be deleted from set of comparables. The ground of appeal is allowed." 5. Before us, the ld. Sr. DR submitted that Hon'ble Delhi High Court in the case of Chryscapital Investment Advisors India (P) Ltd. Vs. Deputy Commissioner of Income Tax in ITA 417/2014, in decision pronounced on 27/04/2015, held that merely on the ground that an entity makes highly/extremely high profits/losses does not, ipso facto, lead to its exclusion from the list of comparables. He further submitted that the learned CIT-(A) was not correct in holding that the said comparable was not functionally similar to the assessee. 6. We have heard the submission of the Ld. Sr. DR on the issue in dispute. In the case of Chryscapital Investment Advisors India (P) Ltd. Vs. DCIT (supra) following questions of law were raised before the Hon'ble High Court: 1) Whether the proviso to Rule 10B(4) of the Income Tax Rules, 1962 will be applicable in case of fluctuations in the operating profit margins of comparable companies during the relevant financial year under question as compared to earlier years? 2) Whether comparables can be rejected on the ground that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowing the finding of the Hon'ble Delhi High Court in the case of Chrycapital Investment Advisers India Private Limited Vs. DCIT (supra), we hold that the comparable M/s. Ultramine and Pigments Ltd. cannot be excluded from the final set of comparables only on the ground of high profit during the year. The ground of the appeal of the Revenue is accordingly allowed. 9. In ground No. 2, the Revenue challenged the direction of the ld. CIT-(A) to consider the additional remuneration of Rs. 10,26,67,942/- (which was received in financial year 2006-07, but claimed as pertaining to financial year under consideration) for computing PLI of the assessee for the year under consideration. The Ld. CIT-(A) has adjudicated the issue in dispute as under: "38.1 I have duly considered submissions of the appellant. The case of the appellant is that it has received additional remuneration of Rs. 102,667,942 from its AEs pertaining to the period under consideration but received and declared in income tax return in FY 2006-07. The appellant has stated that this additional revenue was not included for working out PLI for FY 2006-07. If this additional revenue is considered for working out PLI for AY un ..... X X X X Extracts X X X X X X X X Extracts X X X X
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