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TMI Blog2017 (1) TMI 1623X X X X Extracts X X X X X X X X Extracts X X X X ..... ound is also allowed for statistical purposes. Comparable selection - Held that:- From the TPO’s order for the assessment year 2006-07, it is evident that Goldstone Technologies Limited and Computech Information Ltd. were included in the final list of comparables. However, no reason has been assigned for excluding these comparables from the final list of comparables for assessment year 2007-08. Unless any functional dissimilarity had arisen in assessment year 2007-08 in respect of these two comparables, which warranted exclusion of these two comparables, they should not have been excluded particularity in view of the principle of consistency. We, therefore, restore this matter to the file of the ld. Assessing Officer/ TPO to examine the assessee’s contentions in the light of functional dissimilarity of these comparables and, if, the same are found to be in line with the assessee then these two comparables have to be included to the list of comparability. In the result, this ground is allowed for statistical purposes. Computation of Net Cost Plus (“NCP”) margin of selected comparable companies - Held that:- We direct the ld. Assessing Officer/TOP to compute the operating incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... following comparables :- (a) Cambridge Technology Enterprises Ltd. (b) Powersoft Global Solutions Ltd. (c) SIP Technologies Export Ltd. (d) Systemlogic Solutions Ltd. 4. The final set of comparables is given in para 10 at pages 17 and 18 of his order in which he considered 30 comparables including the four noted above and computed the arithmetic mean at 20.94% as compared to 14.53 of the assessee and, thus, directed for making an upward addition of ₹ 3,45,08,163/- as under :- Total Cost of Provision of Services by the Assessee (a) ₹ 52,70,83,314 OP/OC 20.94 Margin @ 20.94% as discussed above (b) ₹ 11,07,71,245 Arm s Length Price A (a+b) ₹ 63,74,54,559 Price at which international transaction has been undertaken B ₹ 60,29,46,396 Difference A-B ₹ 3,45,08,163 % of difference with B above 5.72% 5. Ld. DRP, aft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t for the difference in working capital employed by the Appellant vis-a-vis the comparable companies. 8. First, we consider ground no.1.4 and 1.8. Apropos ground no.1.4, ld. counsel for the assessee submitted that in regard to (i) Cambridge Technology Enterprises Ltd., (ii) Powersoft Global Solutions Ltd., (iii) SIP Technologies Export Ltd., have to be computed corresponding to assessee s financial year because the accounts are in respect of 15 month in the case of Cambridge Technology Enterprises Ltd.; upto September, 2006 in respect of Powersoft Global Solutions Ltd. and for 18 months in respect of SIP Technologies Export Ltd.. He submitted that if this computation can be made then only these comparables should be included otherwise they could not be included. As regards the Systemlogic Solutions Ltd., ld. counsel pointed out that this is a subsidiary of Helios Matheson Information Technology Ltd., the results for which have already been included by ld. TPO in the final list of comparable selected by him and, therefore, inclusion of Systemlogic Solutions Ltd. results to duplication. In this regard, he referred to page 68 of Annual Report of Helios Matheson Informati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operating income includes interest received on deposits for Previous Years 2013-2014 and 2014-2015 and roll back years. 11. After hearing both the parties, this issue is restored back to the file of ld. Assessing Officer/TPO for verification of assessee s claim as per page 165 of Paper Book read with the chart filed at the time of hearing, which is reproduced hereunder :- RBS India Development Centre Private Limited Assessment Year 2006-07 Particulars Amount Nature Amount Other Income - Provisions written back 733,420 Excess expenses provided towards reimbursement of secondees, subsequently reversed 366,000 Reimbursement expenses incorrectly charged to expenses 5,866 Excess provision of cost made for employees who have resigned 282,690 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion in the case of Jute Corporation of India Ltd. [187 ITR 688 (Hon'ble Supreme Court)]. In this case, the Hon'ble Apex Court, observed as under: 5 .... Even otherwise, an appellate authority while hearing the appeal against the order of a subordinate authority, has all the powers which the original authority may have in deciding the question before it subject to the restrictions or limitations, if any, prescribed by the statutory provisions. In the absence of any statutory provision, the appellate authority is vested with all the plenary powers, which the subordinate authority may have in the matter. Further, in case of Quark Systems India (P.) Ltd [ITA No. 594/2020], the High Court Of Punjab Haryana observed as under: 4. The issue involved in this case is whether the Tribunal was justified in entertaining the additional ground for exclusion of M/s. Datamatics Technologies as comparable and remanding the case to the Assessing Officer whereby it had directed that the assessee shall be entitled to produce all relevant material for determination of proper Arm's Length Price and shall co-operate for expeditious disposal of the matter. xxxx xxx ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consider. The matter is restored back to the file of ld. Assessing Officer/TPO to examine the assessee s contentions in this regard. In the result, the additional ground no.1 is allowed for statistical purposes. 15. As regards the additional ground no.2, ld. counsel pointed out that working capital adjustment has been allowed by ld. DRP in assessment year 2007-08 and in the additional ground the assessee has given all details and, therefore, this matter may be restored back to the file of ld. Assessing Officer/TPO for examining the assessee s plea and to allow the working capital adjustments. After hearing both the parties, this additional ground is admitted for examining the assessee s contentions. This ground is also allowed for statistical purposes. 16. In the result, the appeal of the assessee in ITA No.5538/Del/2010 is partly allowed for statistical purposes. ITA No.5443/Del/2011 (A.Y. 2007-08): 17. This appeal filed by the assessee is directed against the order dated 27.09.2011 passed by the Assessing Officer u/s 144C/143(3) of the Act relating to assessment year 2007-08 pursuant to the direction of the Dispute Resolution Panel-II, New Delhi. 18. The assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d at the time of hearing is reproduced hereunder :- 2.1 By making modification to the set of comparable companies identified by the Appellant by rejecting comparables on grounds of functional dissimilarity. In this regard, the Ld. TPO/ DRP have rejected comparable on erroneous basis without following a cogent economic basis. 23. Ld. counsel pointed out that the main contention of assessee is that the following two comparables have wrongly been rejected by TPO : (a) Goldstone Technologies Limited and (b) Computech Information Ltd.. He pointed out that both these comparables have been accepted by ld. TPO and DRP in assessment year 2006-07 as is evident from page 30-31 of the Paper Book. Ld. DRP rejected these comparables observing that functional similarity has to be examined in particular year. 24. We have considered submissions of both the parties. From the TPO s order for the assessment year 2006-07, it is evident that Goldstone Technologies Limited and Computech Information Ltd. were included in the final list of comparables. However, no reason has been assigned for excluding these comparables from the final list of comparables for assessment year 2007-08. Unless an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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