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TMI Blog2022 (9) TMI 832X X X X Extracts X X X X X X X X Extracts X X X X ..... for Extension of Limitation, In re 438 ITR 296 (SC) read with judgment in Cognizance for Extension of Limitation, In re 432 ITR 206 (SC) dated 08-03-2021 and 421 ITR 314 where the Hon'ble Apex Court took a suo motu cognizance of the situation arising out of the challenges faced by the country on account of COVID-19 Virus and resultant difficulties that could be faced by the litigants across the country and accordingly extended the time limit for filing of the appeals. We, therefore, condone the delay in filing the instant appeal and admit the same for disposal on merits. 3. Succinctly, the facts of the case are that the assessee is engaged in providing after-sales support and market support services in respect of machines sold by its forei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The ld. DR has not brought to our notice any appeal having been filed by the Department against the impugned order. In the instant appeal, the assessee is aggrieved by the exclusion of two companies and inclusion of one company from/to the final tally of comparables. I. Ma Foi Global Search Services Limited and Ma Foi Management Consultants Ltd. : 4. These two companies were included by the assessee in the list of comparables. The TPO excluded them, inter alia, on the ground that they maintained their accounts following calendar year as against the assessee following financial year. The ld. CIT(A) echoed the assessment order on this count. 5. Having heard both the sides and gone through the relevant material on record, it is seen that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... really not comparable so as to qualify for exclusion? The TPO accepted the segmental financials of the company which are germane to the functional profile of the assessee in the international transaction under consideration. This fact is not disputed by the ld. AR as well. The TPO computed OP/OC of this company at 106.80%. The assessee urged before the ld. CIT(A) that this company should be excluded because of its inconsistent profitability trend. To buttress this contention, the assessee submitted the PLI (OP/OC ratio) of this company, as recorded on page 27 of the impugned order, at 187% for the year 2008; 38% for the year 2009; 96% for the year 2010; 34% for the year 2011; and 27% for the year 2012. The assessee also made a mention that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... argins of all the comparables is adopted to find out the arm's length margin, it takes care of the individual high profit or lower profit margin companies which are otherwise comparable. This deciphers that a company which is otherwise similar to the assessee and passes all the tests of comparability, cannot be excluded from the list of comparables simply because of its high or low profit margin. There is no mention in the language of the provision for the exclusion of potential comparable companies simply on account of high or low profit rate. The only caveat, in our considered opinion, is to look at the reasons for the high or low profit margins returned by such otherwise comparable companies. If the abnormal profit/loss occurs because of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h of the TPO in treating the otherwise comparable companies for the purposes of inclusion in the list of comparables by the TPO is consistent, irrespective of their having earned high profits or incurred losses. 11. Though the TPO recorded OP/OC of ICC International Agencies at 106.80%, the assessee contended before the ld. CIT(A) that its correct profit margin was 96%. Now a diametrically opposite stand is being taken by the ld. AR contending that the actual profit margin of this company is more than 106.80%. To support such a contention, he put forth certain unverified calculations, which were not before any of the authorities below. In support of his contention urging for the exclusion of this company on the ground of high profit, he re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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