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TMI Blog2024 (9) TMI 349X X X X Extracts X X X X X X X X Extracts X X X X ..... e. Accordingly , we direct the Ld. AO to exclude these five companies from the list of comparable for the purpose of working of profit level indicator( PLI ). Suitability of the entity S.K.Communications - The major receipts of S.K.Communications are from sub-contract work, however in the case of the assessee the total revenue is from trading activity. Therefore we are of considered opinion that S.K.Communications is functionally dissimilar and is not comparable to the assessee. Suitability of the entity Arya - Receipt from the trading activity of Arya is 97.45% of the total revenue from operations, resulting only nominal receipt from services. As the major receipts are from trading activity, the contention of the Ld. AR in this regards is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 44B of the Income Tax Act, 1961 ( the Act ). 2. Facts of the case are that the assessee is engaged in the business of trading of products in telecommunication and information technology sectors which were imported from its Associated Enterprises (AEs). For the A.Y. 2017-18, the assessee filed the return of income on 30/11/2017, declaring loss of Rs. 9,95,903/-. In view of the international transaction of import of products from the AEs, determination of Arm s Length Price ( ALP ) was referred to the learned Transfer Pricing Officer ( Ld. TPO ). The assessee had adopted Resale Price Method( RPM ) as Most Appropriate Method ( MAM ) in the TP study report. Ld. TPO by order dated 29/12/2020, rejected RPM as MAM and adopting the Transaction Net ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, the Ld. AR submitted before the bench, some purchases and sales invoices to demonstrate that the items purchased as per the purchase invoice and sold as per sales invoices are same. The Ld. AR further submitted that the main activities of the said eight comparables companies were in the nature of services. Therefore, he requested that, these comparables may be excluded from the list of comparables. 4. He also submitted that the assessee is praying for inclusion of one comparable, namely, Globe Mobility Private Limited( Globe ), which was excluded by the Revenue authorities. 5. The assessee also filed one additional ground of appeal which is as under: Ground No. 1 : erred in not appreciating that the appellant is in first year of operatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee. As per the claim of the assessee, they were engaged purely in trading activities and no value addition had been made to the product before the same were supplied to the buyer. The assessee also contended that they did not perform any activity in the nature of services in pursuance of the supply of the product i.e. any installation etc. However the Ld. DR argued that the assessee had performed the installation services also. We have gone through the purchase and sales invoices submitted by the assessee corresponding to the supply of the products. The assessee has also furnished an affidavit dated 05/08/2022 to the effect that the company had not undertaken any functions pertaining to installation/commissioning services. On the perusal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rofit level indicator( PLI ). 10. So far as, the suitability of the entity, namely, S.K.Communications, to be compared with the assessee was considered, the Ld. AR brought our attention to page no. 1946 of the P.B. and submitted that S.K.Communications is a subcontractor of TCIL for the work of erecting communication towers, posting VSAT and antennas, laying cables, setting up computer hardware and installing computer softwares and power backups to run those systems . The total receipt of the assessee from TCIL is Rs. 441,84,400/-( page no. 1942 of the P.B.), which is 87.03% of the total revenue from operation. Hence the major receipts of S.K.Communications are from sub-contract work, however in the case of the assessee the total revenue is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , services, other receipts and total revenue from operations of Cineom are Rs. 525354754/-, Rs. 82093312/-, Rs. 27067035/- and Rs. 634515101/- respectively. Hence the receipt from the trading activity of Cineom is 82.80% of the total revenue from operations, resulting into only 17.20% from other activity. As the major receipts are from trading activity, the contention of the Ld. AR in this regards is not acceptable and there submission for exclusion of Cineom from the list of comparable is dismissed. 13. Coming to the issue relating to the inclusion of the entities, Globe, which was rejected by the revenue authority due the reason that, company data was not available. The Ld. AR submitted that, the annual report of Globe is now available on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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