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| The Tax Publishers2019 TaxPub(DT) 0440 (Mum-Trib) INCOME TAX ACT, 1961
Section 92C
Merely due to different financial year ending R Systems could not be treated as non-comparable as profitability/margin of company could be ascertained by extrapolating financial data available for the period of nine months to the subsequent three months. However, in line with assessee's submission that the company was involved in product development and no segmental information was available in the annual report, matter was remanded to TPO for verification afresh.
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Transfer pricing - Determination of ALP - Selection of comparables - Different financial year ending
Assessee rendered software development services to its AE abroad. TPO considered R Systems Ltd. as comparable to assessee's case. Assessee challenged this on the ground of R Systems having different financial year ending.Held: Merely due to different financial year ending R Systems could not be treated as non-comparable as profitability/margin of company could be ascertained by extrapolating financial data available for the period of nine months to the subsequent three months, however, in line with assessee's submission that the company was involved in product development and no segmental information was available in the annual report, matter was remanded back to TPO with direction that if annual report of company did not provide enough segmental details to accurately arrive at profit margin of different segments, there could be no comparability analysis.
REFERRED :
FAVOUR : Matter remanded.
A.Y. : 2007-08
INCOME TAX ACT, 1961
Section 92C
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