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| The Tax Publishers2020 TaxPub(DT) 1056 (Pune-Trib) INCOME TAX ACT, 1961
Section 92C
Where CIT(A) directed to exclude the other three companies by observing that their turnover was several times higher vis-a-vis assessee company and view taken by CIT(A) echoes with that of High Court in CIT v. Pentair Water India Pvt. Ltd. (2016) 381 ITR 216 (Bom) : 2015 TaxPub(DT) 5492 (Bom-HC), in which the view of Tribunal in excluding certain companies on the basis of higher turnover was approved, therefore, matter was remanded back to AO/ TPO for determining the ALP of international transaction afresh.
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Transfer pricing - Computation of arm's length price - Selection of comparables -
Assessee was engaged as captive software development support service provider. AO made a reference to the TPO for determining ALP who observed that assessee adopted TNMM as the most appropriate method for benchmarking the international transaction. TPO made certain inclusions and exclusions in/from the list of comparables put forth by assessee. CIT(A) gave certain directions including upholding the inclusion of E-Infochips Ltd. and directing to exclude FCS Software Solutions Ltd., L&T Info Tech Ltd., Persistent Systems Ltd., Infosys Technologies Ltd. and Sasken Communication Technologies Ltd. TPO included FCS Software Solutions Ltd., in the list of comparables. Assessee objected to inclusion by contending that this company made sales which was several times higher than the turnover of assessee company. CIT(A) ordered to exclude the same. Held: High Court in case of CIT v. Agnity India Technologies Pvt. Ltd. (2013) 219 Taxman 26 (Del) : 2013 TaxPub(DT) 2693 (Del-HC) ordered to exclude Infosys being a giant company. CIT(A) directed to exclude the other three companies by observing that their turnover was several times higher vis-a-vis assessee-company. The view taken by CIT(A) echoes with that of High Court in CIT v. Pentair Water India Pvt. Ltd. (2016) 381 ITR 216 (Bom) : 2015 TaxPub(DT) 5492 (Bom-HC), in which the view of Tribunal in excluding certain companies on the basis of higher turnover was approved. Since the facts of the instant case were similar in as much as the TPO included these four companies in the list of comparables, therefore, matter was remanded back to AO/ TPO for determining the ALP of international transaction afresh.
Followed:CIT v. M/s. Pentair Water India Pvt. Ltd. (2016) 381 ITR 216 (Bom) : 2015 TaxPub(DT) 5492 (Bom-HC) CIT v. Agnity India Technologies Pvt. Ltd. (2013) 219 Taxman 26 (Del) : 2013 TaxPub(DT) 2693 (Del-HC)
REFERRED :
FAVOUR : In assessee's favour by way of remand
A.Y. :
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