9911796707
TMI Blog2017 (1) TMI 1565X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment year 2007-08 in consonance with the orders passed by the ld. DRP/TPO on the grounds inter alia that :- "1. Whether Ld. CIT (A) was correct on facts and circumstances of the case and in law in directing to exclude M/s. Mold-Tex Technologies from the list of comparables? 2. Whether Ld. CIT (A) was correct on facts and circumstances of the case and in law in restricting the addition from Rs. 2,08,34,850/- to Rs. 1,63,19,800/- made in the income of the assessee being difference between the Arm's Length Price? 3. Whether Ld. CIT (A) was correct on facts and circumstances of the case and in law in directing the AO to exclude the telecommunication expenses amounting to Rs. 9,15,422/- from the total turnover while calculating the dedu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Net Margin Method (TNMM) as the most appropriate method with Operating Profit / Operating Cost (OP/OC) as the Profit Level Indicator (PLI) by selecting 11 comparables with three years weighted average margin at 6.88% vis-à-vis assessee's margin at 12.20% and found its international transaction at arm's length. 6. TPO accepted the TNMM with OP/OC as PLI as applied by the assessee company, but rejected seven comparable companies selected by the assessee company and identified 21 companies by making independent search on the basis of functions, assets and risks of the assessee company and finally chosen 25 comparable companies. TPO also used current year data as against three years data used by the assessee company. As per TPO study, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lifies all filters applied and as such, is a valid comparable. However, ld. AR for the assessee raised objections before the TPO for inclusion of this company on the ground that the margins are abnormally high. 10. However, CIT (A) accepted the assessee's contention and has directed to exclude this company form the list of comparables by making following observations :- "6.9 I have considered the submission and the order of the TPO. The segmental reporting of the company as quoted in the earlier paragraphs creates a sufficient doubt about the truthfulness of the results of ITES segment. This company has two segments, ITES and Plastic division. ITES is having 100% exemption whereas on the profits of plastic division the company has to pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... use software development etc. Therefore, I hold that this company should be excluded from the list of comparables." 11. When we examine the functional profile of assessee company vis-à-vis Mold-Tek Technologies Ltd., both are functionally dis-similar. Undisputedly, assessee company is into ITES services as a captive service providers whereas Mold-Tek is operating in two business segment i.e. (i) plastic divisions which is into manufacturing of lube and oils, paints, pet projects, consumer products etc.; and (ii) IT Division specialized in providing structural design and detailing services which could be categorized as structural engineering services. CIT (A) has also excluded this company as comparable on ground of abnormal growt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndia) Private Ltd. (supra), we hereby uphold the order passed by CIT (A). GROUND NO.3 14. Expenses of Rs. 9,05,422/- on account of communication expenses has been disallowed by the AO from the export turnover but allowed by the ld. CIT (A). The ld. DR for the revenue by relying upon the order passed by the AO contended that the ld. CIT (A) has erred in directing the AO to exclude the telecommunication expenses amounting to Rs. 9,05,422/- from the total turnover while calculating the deduction u/s 10A of the Act. 15. The ld. AR for the assessee to support the order passed by ld. CIT (A) relied upon the decisions rendered by the ITAT, Delhi Bench in (i) DCIT vs. Global Logic India (P) Ltd. - (2013) 56 SOT 373; and (ii) DCIT vs. Binary Sema ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
