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TMI Blog2025 (4) TMI 1469X X X X Extracts X X X X X X X X Extracts X X X X ..... red proceedings 2. erred in not passing the final assessment order within the time limit as provided under Section 153 of the Act ie., the outer limit for passing of the final assessment order which for AY 2020-21 would be 30 September 2023, thus making the assessment proceedings time barred and bad in law and thereby it should be quashed; A Transfer Pricing grounds in relation to international transaction of Provision of IT enabled services Reference to the TPO 3. erred in making a reference of the Appellant's case to the TPO, without complying with the provisions of Section 92CA, and then making a transfer pricing adjustment of Rs 19,96,41,940 to the Appellant's income which is bad in law: Rejection of comparables selected by the Appellant in its TP documentation 4. erred in rejecting comparable companies selected by the Appellant i.e. Anderson Business Solutions Private Limited. Suprawin Technologies Ltd, Sundaram Business Services Limited, iSN Global Solutions Private Limited and Crystal Hues Limited by applying a turnover filter of less than 1/10 times and more than 10 times without appreciating that the said filter is not an appropriate filter and also dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent to the arm's length price, if any. should be limited to the lower end of the 3 percent range as the Appellant has the right to exercise this option under the proviso to Section 92C of the Act; Incorrect calculation of the transfer pricing adjustment 13. the learned AO/ TPO erred in incorrectly computing the transfer pricing adjustment to Rs 19,96,41,940 whereas the correct calculation of the transfer pricing adjustment as per his own computation would be Rs 11,96,41,940, B. Corporate Tax grounds Incorrect computation of the Dividend Distribution Tax (DDT) demand 14. erred in granting DDT credit of Rs 50,00,000 instead of DDT credit of Rs 57,00,917 claimed by the Appellant in the ROI, thus resulting in the short grant of DDT credit, 15. erred in incorrectly levying consequential interest amounting to Rs 4,89,027 under Section 115P of the Act; 16. erred in adjusting disputed DDT demand of Rs 71,261 from the total refund due to the Appellant. While making such adjustment, the learned AO has erred by disregarding the fact that such DDT demand was incorrectly levied in the intimation order passed under Section 143(1) of the Act against which the Appellant has alrea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15,46,850/- 3 Variation in respect of issue of TP Adjustment 19,96,41,940/- Total Assessed Income 83,11,88,790/- 3.2. Being aggrieved, the Appellant has preferred the present appeal before the Tribunal against the Final Assessment Order, dated 29/07/2024, on the grounds reproduced in paragraph 2 above. 4. We have heard both the sides and have perused the material on record. 5. The Appellant has challenged the Transfer Pricing Adjustment of INR.19,96,41,940/- made by the Assessing Officer by way of Ground No. A1 to A 13 reproduced here in Paragraph 2 above. Ground No. 1 6. Ground No.1 raised by the Appellant pertains to assessing the total taxable income of the Appellant of INR.83,11,88,790/- as against a total income of INR.63,15,46,850/- as computed by the Appellant in its return of income. During the course of hearing the Learned Authorized Representative for the Appellant, stated that the Appellant does not wish to press this ground. Accordingly, Ground No.1 raised by the Appellant is dismissed as not pressed as being general in nature. Ground No. 2 7. Ground No.2 raised by the Appellant pertains to validity of the impugned assessment proceedings on account o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... excluded MPS Limited from the final list of comparables by placing reliance upon the decision of Tribunal in the case of the Appellant for the Assessment Year 2017-2018 [ITA No.732/Mum/2022, dated 18/08/2022]. On perusal of aforesaid decision, we find that the Tribunal had directed exclusion of MPS Limited from the list of comparables on the ground of functional dissimilarities. The relevant extract of the aforesaid decision of Tribunal reads as under: "9. The next company, which the assessee seeks exclusion is M/s MPS Ltd. The Ld A.R submitted that this company is engaged in rendering end to end services to its clients in publishing sector, which included content creation and production services. He submitted that this company is also engaged in software services and product development. In the annual report of this company, it is reported that it is engaged in five lines of businesses, viz., (a) Content creation and development, (b) Content production and transformation, (c) Learning media solutions and customer support, (d) Order management and (e) Platform development and technology services. However, it has not given any segmental details. The platforms developed by this co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to distribution and delivery (Page No. 523 of the Paper Book). Further, the principle business activities of the Company were stated to be Content Solutions (82% of total turnover) and Platform Solutions (18% of total turnover) (Page No. 540 of the Paper Book). However, no further segmental details are available. Further, MPS Limited has also developed proprietary products/platform. On the other hand the Appellant continues to be a captive service provider providing support services to its AEs. Thus, MPS Limited is has functionally dissimilarities and in absence of segmental data, MPS cannot be taken as a comparable. Therefore, respectfully following the decision of the Tribunal in the case of the Appellant for the Assessment Year 2017-2018, we direct the Assessing Officer/TPO to exclude MPS Limited from the list of comparables 12. Next, we take the issue of inclusion/exclusion of R. Systems International Limited [for short 'R Systems']. After taking into consideration the rival submissions, we find that R Systems was rejected from the list of comparables by the TPO on account of different accounting year. Though the accounts of R Systems were prepared taking calendar year as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rapolated then the comparable cannot be excluded solely on the ground that the comparables have different financial year endings." In view of the above said decision rendered by Hon'ble Delhi High Court, we accept the contentions of Ld A.R that this company could not have been rejected by the TPO merely for the reason that it follows different accounting year, when the financial year results for the period matching with that of the assessee could be collated. However, as submitted by Ld D.R, it is required to be examined as to whether this company gets itself qualified in other filters applied by the TPO also. Accordingly, we are of the view that this comparable company needs to be examined afresh at the end of AO/TPO. Accordingly, we restore this comparable company to the file of AO/TPO for examining it afresh." 13. On perusal of the above it becomes clear that the Tribunal had rejected the approach adopted by the TPO and directed for fresh examination of R Systems as a comparable by placing reliance on the judgment of the Hon'ble Delhi High Court in the case of CIT-II Vs. McKinsey Knowledge Centre India Pvt. Ltd [ITA No. 217/2014, Dated 27/03/2015] wherein it was held that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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