Brintons Carpets Asia Private Ltd., Pune V. Deputy Commissioner of Income-tax,

ITA 1739/PUN/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 0359 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 17-09-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Related party transaction; Transfer pricing; International transaction; Wholly owned subsidiary

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE . . , , ' # BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.1739/PN/2014 '% % / ASSESSMENT YEAR : 2009-10 BRINTONS CARPETS ASIA PRIVATE LIMITED, GAT NO.414/415/416, VILLAGE URAWADE, TAL. MULSHI, PUNE 412 108 PAN : AAACB7059H . / APPELLANT V/S D CIT, CIRCLE - 1(1), PUNE . /RESPONDENT / APPELLANT BY : SHRI NIKHIL PATHAK / RESPONDENT BY : SHRI SUHAS KULKARNI / ORDER PER VIKAS AWASTHY, JM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDE R OF COMMISSIONER OF INCOME-TAX (APPEALS)-IT/TP, PUNE DATED 08-07-2014 FOR THE ASSESSMENT YEAR 2009-10. 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM THE RECORDS ARE : THE ASSESSEE IS A 100% SUBSIDIARY OF BRINTONS LTD., UK. TH E ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND EXPORT OF MACHINE-MADE WOOLLEN AND NYLON CARPETS. THE ASSESSEE IS ALSO PROVIDING PLANNING, ESTIMATION AND DESIGN SERVICES TO ITS A SSOCIATED ENTERPRISES FROM ITS SERVICE CENTER IN INDIA. THUS, THE LAT ER SERVICE / DATE OF HEARING :05.10.2016 / DATE OF PRONOUNCEMENT: 14.12.2016 2 ITA NO.1739/PN/2014 PROVIDED BY THE ASSESSEE ARE BROADLY CLASSIFIED AS IT EN ABLED SERVICES (ITES). DURING THE ASSESSMENT YEAR UNDER APPEA L, THE ASSESSEE ENTERED INTO VARIOUS INTERNATIONAL TRANSACTIONS INCLUDING DESIGN SERVICES. IN RESPECT OF PROVISION OF DESIGN SERVICE S, THE INTERNATIONAL TRANSACTION WAS TO THE TUNE OF RS.3,91,11,972/ -. THE ASSESSEE APPLIED TNMM METHOD AS THE MOST APPROPRIATE M ETHOD FOR DETERMINING ARMS LENGTH PRICE OF INTERNATIONAL TRANSACTION S WITH RESPECT TO DESIGN SERVICES. THE ASSESSEE USED PROFIT LEVEL INDICAT OR OF OPERATING MARGIN TO OPERATING COST. THE PROFIT LEVEL INDICAT OR OF THE ASSESSEE WAS 8.54% FOR DETERMINING ALP. 3. THE ASSESSEE DETERMINED THE AVERAGE PLI OF COMPARA BLES AT 11.19%. THE ASSESSEE SELECTED COMPARABLES ON THE BASIS OF MULTIPLE YEAR DATA WITH MEAN MARGIN OF 3.18%. THE TPO REJECTED SO ME OF THE COMPARABLES SELECTED BY THE ASSESSEE AND ALSO REJECTED THE USE OF MULTIPLE YEAR DATA ADOPTED BY THE ASSESSEE. THE TPO MA DE ADJUSTMENT OF RS.39,65,670/- IN RESPECT OF INTERNATIONAL TRANSACTIONS WITH AE. ON THE BASIS OF ADJUSTMENT MADE BY TPO, THE ASSESSING OFFICER PASSED ASSESSMENT ORDER DATED 19-02-2 013 U/S.143(3) R.W.S.144C(3) OF THE I.T. ACT, 1961 MAKING AFORESAID ADDITION IN THE INCOME RETURNED BY THE ASSESSEE. 4. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PR EFERRED APPEAL BEFORE THE CIT(A). BEFORE THE FIRST APPELLATE AUTH ORITY, THE ASSESSEE ASSAILED THE ACTION OF TPO IN REJECTING ADDITIONAL COMPARABLES IDENTIFIED BY THE ASSESSEE, INCLUSION OF INFOSYS BPO LTD. AND COSMIC GLOBAL LTD. IN THE LIST OF COMPARABLES AND R EJECTION OF MULTIPLE YEAR DATA USED BY THE ASSESSEE IN TP STUDY. THE ASSESSEE FURTHER ASSAILED ADHOC RISK ADJUSTMENT OF 2% MA DE BY THE 3 ITA NO.1739/PN/2014 TPO. THE CIT(A) REJECTED THE CONTENTIONS OF THE ASSESSE E AND UPHELD THE ASSESSMENT ORDER. 5. AGAINST THE FINDINGS OF CIT(A), THE ASSESSEE IS IN SECOND APPEAL BEFORE THE TRIBUNAL. THE ASSESSEE HAS ASSAILED THE ORDER OF FIRST APPELLATE AUTHORITY BY RAISING FOLLOWING GROUNDS OF APPEAL : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. ASSESSING OFFICER (ASSESSING OFFICER)/COMMISSIONER OF INCOME- TAX- IT/TP (CIT(A) ERRED IN MAKING AN UPWARD ADJUSTMENT O F RS.39,65,670/- OF THE INCOME OF THE APPELLANT. IN DOING SO, THE LD . AO/CIT(A) SPECIFICALLY ERRED IN : 1.1 ACCEPTING FUNCTIONALLY INCOMPARABLE COMPANIES WI THOUT GIVING COGNIZANCE TO THE JUDICIAL PRECEDENTS FOR REJECTING THE SAID COMPANIES. 1.2 DISREGARDING ADDITIONAL COMPARABLES PROVIDED BY T HE APPELLANT ON THE BASIS OF A FRESH OF COMPARABLES. 1.3 CONSIDERING THE SINGLE YEAR DATA FOR THE COMPARAB LES, I.E. DATE FOR F.Y. 2008-09 ONLY AND DISREGARDING MULTIPLE YEAR DAT A WHICH WAS CONSIDERED BY THE APPELLANT IN ACCORDANCE WITH THE P ROVISIONS OF RULE 10B(4) OF THE INCOME-TAX RULE, 1962 (RULES) AND 1.4 PROVIDING AN ADHOC RISK ADJUSTMENT FOR DIFFERENTI AL RISKS ASSUMED BY THE APPELLANT WITHOUT FOLLOWING ANY SCIENTI FIC METHODOLOGY. 6. SHRI NIKHIL PATHAK APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THERE IS NO DISPUTE WITH RESPECT TO ALP OF TRANSACTIONS. THE ONLY DISPUTE IS WITH RESPECT TO SELECT ION OF COMPARABLES FOR BENCHMARKING INTERNATIONAL TRANSACTIONS IN RESPECT OF DESIGN SERVICES. THE ASSESSEE SELECTED COMPARABLES WIT H MULTIPLE YEAR DATA HAVING MEAN MARGIN OF 3.18%. HOWEVER, THE SAME WAS REJECTED IN AN ARBITRARY AND UNJUSTIFIED MANNER. TO SEL ECT THE COMPARABLES THE ASSESSEE APPLIED FOLLOWING FILTERS : (1) TURNOVER FILTER COMPANIES HAVING SALES GREATER THAN ZERO AND RATIO OF OTHER OPERATING INCOME TO SALES GREATER THAN 50% O VER THE TIME PERIOD UNDER CONSIDERATION WERE SELECTED. 4 ITA NO.1739/PN/2014 (2) COMPANIES WITH RATIO OF R&D EXPENSES TO SALES LESS THAN 3% WERE SELECTED. (3) COMPANIES WITH RATIO OF NET FIXED ASSETS TO SALES LESS THA N 200% WERE SELECTED. (4) COMPANIES THAT HAD AVERAGE SALES LESS THAN RS.1 CRORE DU RING THE PERIOD INDICATING THAT THE COMPANIES ARE START UP OPE RATIONS WERE REJECTED. (5) COMPANIES WITH A POSITIVE NET WORTH WERE SELECTED. (6) COMPANIES WITH RATIO OF SUM OF ADVERTISING, MARKETING AND DISTRIBUTION EXPENSES TO SALES LESS THAN 3% WERE SELECTED. (7) COMPANIES PROVIDING IT ENABLED SERVICES PROVIDING BROA D FRAMEWORK FOR COMPARABILITY ANALYSIS TO THOSE PROVIDED BY THE ASSESSEE SELECTED USING QUALITATIVE FILTER. (8) COMPANIES WITH RELATED PARTY TRANSACTIONS WERE ELIMINA TED. 6.1 THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT TH E TPO REJECTED SEVERAL COMPANIES WHICH WERE SELECTED BY THE A SSESSEE DURING TP STUDY. THEREAFTER, THE ASSESSEE GAVE ANOTHER LIST OF COMPANIES WHICH FALL WITHIN THE CRITERIA, HOWEVER, THOSE CO MPANIES WERE NOT CONSIDERED BY THE TPO. THE FINAL LIST OF COMPARA BLES SELECTED BY THE TPO IS AT PAGE 25 OF THE ORDER OF TPO. OUT OF TOTAL 7 COMPANIES FINALLY SELECTED BY THE TPO, THE ASSESSEE HAS O BJECTION IN SELECTION OF 3 COMPANIES, I.E.(1) COSMIC GLOBAL LTD., (2) INFOSYS BPO LTD., AND (3) E4E-HEALTHCARE BUSINESS SERVICES PVT. LTD. 6.2 THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT INFOSYS B PO LTD. IS A GROUP COMPANY OF INFOSYS LTD. THERE IS HUGE DIFFE RENCE BETWEEN THE VOLUME OF OPERATIONS OF THE SAID COMPANY AND THAT OF ASSESSEE. THE TURNOVER OF INFOSYS BPO LTD. IS MUCH MORE THAN THAT OF THE ASSESSEE, THEREFORE, THE SAID COMPANY IS NOT A GOO D COMPARABLE. THE LD. AUTHORISED REPRESENTATIVE IN RESPECT OF HIS SUBMISSIONS THAT DUE TO LARGE DISPARITY ON ACCOUNT OF VOL UME OF TRADE INFOSYS BPO LTD. IS NOT A GOOD COMPARABLE PLACED R ELIANCE ON THE FOLLOWING DECISIONS : 5 ITA NO.1739/PN/2014 1. CIT VS. PENTAIR WATER INDIA PVT. LTD. REPORTED AS 69 TAXMANN.COM 180 (BOM.) 2. JOHN DEERE INDIA PVT. LTD. VS. ACIT REPORTED AS 53 TA XMANNC.COM 40 (PUNE) 3. MOMENTIVE PERFORMANCE MATERIALS INDIA PVT. LTD. VS. A CIT REPORTED AS 67 TAXMANN.COM 327 (BOM). 6.3 IN RESPECT OF COSMIC GLOBAL LTD. THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT THE COMPANY FAILS ON FUNCTIO NAL FILTER. THE LD. AUTHORISED REPRESENTATIVE FURTHER SUBMITTED THAT BEFORE TPO, THE ASSESSEE HAS NOT CONTESTED INCLUSION OF COSMIC GLOBAL LTD., LATERON THE ASSESSEE CAME ACROSS THE DECISION RENDERE D BY MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. M/S. MAERSK GLOBAL SERVICES CENTRE (INDIA) PVT. LTD. IN ITA NO.3774/MUM/2011 D ECIDED ON 09-11-2011 WHEREIN COSMIC GLOBAL LTD. WAS EXCLUDED FRO M THE LIST OF COMPARABLES FOR THE REASON THAT COSMIC GLOBAL LTD. H AS OUTSOURCED CONSIDERABLE PORTION OF ITS BUSINESS, WHEREAS T HE ASSESSEE INCURRED SUBSTANTIAL COST ON ITS EMPLOYEES. THE LD. AUTHORISED REPRESENTATIVE FURTHER IN SUPPORT OF HIS SUBMIS SIONS PLACED RELIANCE ON THE FOLLOWING DECISIONS : 1. CUMMINS TURBO TECHNOLOGY LTD. VS. DCIT REPORTED AS 68 TAXMANN.COM 273 (PUNE) 2. MAXIMIZE LEARNING PVT. LTD. VS. ACIT REPORTED AS 58 T AXMANN.COM 169 (PUNE) 3. SCHLUMBERGER GLOBAL SUPPORT CENTRE LTD. VS. DY. DIRE CTOR OF INTERNATIONAL TRANSACTION REPORTED AS 64 TAXMANN.COM 322 (PUNE) 6.4 THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT E4 E- HEALTHCARE BUSINESS SERVICES PVT. LTD. IS A COMPANY WHIC H WAS SELECTED BY THE TPO. THE SAID COMPANY IS FUNCTIONALLY DIFFER ENT. THE SAID COMPANY WAS EXCLUDED FROM THE LIST OF COMPARABLES BY PUNE BENCH OF THE TRIBUNAL IN THE CASE OF HOV SERVICES LT D. VS. JCIT IN ITA NO.1896/PN/2013 DECIDED ON 31-08-2016 AS TH E COMPANY IS ENGAGED IN DIFFERENT BUSINESS. THE SAID COMPANY IS 6 ITA NO.1739/PN/2014 PROVIDING HEALTHCARE OUTSOURCING SERVICES FOR THE HEALTHCA RE INDUSTRY IN THE US. 6.5 THE LD. AUTHORISED REPRESENTATIVE FURTHER SUBMITTED THAT THE AUTHORITIES HAVE ERRED IN NOT CONSIDERING MULTIPLE YEAR DA TA USED BY THE ASSESSEE IN ACCORDANCE WITH THE PROVISIONS OF RULE 10 B(4) OF THE I.T. RULES, 1961. THE CIT(A) APPLIED SAFE HARBOUR RULES WHICH WERE INTRODUCED BY THE FINANCE ACT, 2012 W.E.F. 2013. THE LD. AUTHORISED REPRESENTATIVE FINALLY PRAYED FOR SETTING ASIDE THE IMPUGNED ORDER AND EXCLUDING THREE COMPANIES, I.E. INFOSYS B PO LTD., COSMIC GLOBAL LTD. AND E4E HEALTHCARE FROM THE LIST OF COMPARABLES AS WELL AS DELETING ADHOC RISK ADJUSTMENT OF 2%. 7. ON THE OTHER HAND SHRI SUHAS KULKARNI REPRESENTING TH E DEPARTMENT VEHEMENTLY SUPPORTED THE FINDINGS OF CIT(A) IN REJECTING THE CONTENTIONS OF ASSESSEE. THE LD. DEPARTMENTAL REPR ESENTATIVE SUBMITTED THAT INFOSYS BPO LTD. AND COSMIC GLOBAL LTD. W ERE SELECTED BY THE ASSESSEE IN TP STUDY. EVEN DURING PROCE EDINGS BEFORE TPO, THE ASSESSEE DID NOT RAISE ANY OBJECTION FOR EXCLUDING THE SAID COMPANIES FROM THE LIST OF COMPARABLES. IT WAS FOR THE FIRST TIME BEFORE THE CIT(A) THAT THE ASSESSEE OBJECTED TO INC LUSION OF SAID COMPANIES IN THE LIST OF COMPARABLES. THE GROUNDS ON WHICH THE SAID COMPANIES ARE SOUGHT TO BE EXCLUDED WERE VERY MU CH IN EXISTENCE AT THE TIME OF PROCEEDINGS BEFORE THE TPO. THE ASSESSEE IS SEEKING EXCLUSION OF COSMIC GLOBAL LTD. ON ACCOUNT OF FUNCTION AL DIFFERENCE, HOWEVER, THE ASSESSEE HAS NOT SUBSTANTIATED A S TO HOW THE SAID COMPANIES ARE FUNCTIONALLY DIFFERENT FROM THE ASSES SEE. THE ASSESSEE HAD NOT APPLIED FUNCTIONAL TEST FILTER AT THE TIME OF SELECTING THE COMPANIES. 7 ITA NO.1739/PN/2014 7.1 IN RESPECT OF E4E-HEALTHCARE BUSINESS SERVICES PVT. L TD., THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSEE NE VER OBJECTED TO THE INCLUSION OF SAID COMPANY IN FINAL LIST OF COMP ARABLES BEFORE THE CIT(A). ON USE OF MULTIPLE YEAR DATA, THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT PROVISIONS O F RULE 10B(4) PROVIDES THAT FOR ANALYZING COMPARABILITY OF AN UNCON TROLLED TRANSACTION WITH AN INTERNATIONAL TRANSACTION THE DATA RE LATING TO FINANCIAL YEAR IN WHICH INTERNATIONAL TRANSACTION HAS BEEN EN TERED INTO SHOULD BE USED. HOWEVER, EXCEPTION TO THE RULE HAS ALSO BEEN GIVEN FOR USE OF DATA OF TWO PREVIOUS YEARS WHERE THE D ATA HAS INFLUENCE ON THE DETERMINATION OF TRANSFER PRICES IN RELATIO N TO THE TRANSACTIONS BEING COMPARED. THE ASSESSEE IN PRESENT C ASE HAS NOT HIGHLIGHTED AS TO HOW THE PREVIOUS YEAR DATA HAS INFLUENC ED DETERMINATION OF TRANSFER PRICES IN RELATION TO THE TRANSA CTIONS BEING COMPARED. 7.2 THE LD. DEPARTMENTAL REPRESENTATIVE FURTHER SUBMITTE D THAT IF THE ARGUMENT OF LD. AUTHORISED REPRESENTATIVE HAS TO B E ACCEPTED, THEN THE OTHER COMPANIES INCLUDED IN THE LIST OF COMPARABLE S, VIZ., TECH PROCESS SOLUTIONS LTD., IN HOUSE PRODUCTION LTD., C AMEO CORPORATE SERVICES LTD AND SPARSH BPO SERVICES LTD. S HOULD ALSO BE EXCLUDED FROM THE LIST OF COMPARABLES AS ALL THESE COMPANIE S FAIL TO QUALIFY FILTERS APPLIED BY THE ASSESSEE. THE LD. DEPARTME NTAL REPRESENTATIVE EMPHASIZED THAT SAME YARDSTICK SHOULD BE APPLIED FOR SELECTING OR REJECTING THE COMPANIES. THE LD. DEPARTM ENTAL REPRESENTATIVE CONTENDED THAT THE COMPANIES SHOWING RE SULTS FAVOURABLE TO THE ASSESSEE SHOULD NOT BE INCLUDED IN THE LIST OF COMPARABLES IGNORING FUNCTIONAL DISPARITY. 8 ITA NO.1739/PN/2014 7.3 IN RESPECT OF RISK ADJUSTMENT THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSEE IS NOT EXP OSED TO MAJORITY OF THE RISKS WHICH ARE FACED BY COMPARABLE COMPA NIES. THUS, THERE IS SIGNIFICANT DIFFERENCE IN THE RISK PROFILE WHICH WARRANTS ADJUSTMENT. SINCE THE RISK CANNOT BE QUANTIFIE D THE TPO HAS MADE ADHOC ADJUSTMENT OF 2%. 8. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENT ATIVES OF THE RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AU THORITIES BELOW. THE ASSESSEE HAS ASSAILED THE ORDER OF CIT(A) IN U PHOLDING THE ADDITION IN RESPECT OF INTERNATIONAL TRANSACTION WITH AE . THE ASSESSEE IS PROVIDING DESIGN SERVICES TO ITS AE. THE ASS ESSEE APPLIED TNMM AS THE MOST APPROPRIATE METHOD FOR BENCHMARKING IT S INTERNATIONAL TRANSACTIONS WITH AE, WHICH WAS ACCEPTED BY THE AUTHORITIES BELOW. THE ONLY DISPUTE RAISED BY THE ASSESSE E IN APPEAL IS WITH RESPECT TO SELECTION OF COMPARABLES. THE ASSESSEE INITIALLY GAVE LIST OF 14 COMPARABLES. MOST OF WHICH WERE REJECTED BY THE ASSESSING OFFICER FOR VARIOUS REASONS INCLUDING HIGH RELATED P ARTY TRANSACTIONS, DOMESTIC OPERATIONS, COMPARABLES FAIL TO STAN D THE SCRUTINY OF FAR ANALYSIS ETC. THE ASSESSEE HAD USED MU LTIPLE YEAR DATA FOR DETERMINING PLI OF COMPARABLES. THE USE OF MULTIP LE YEAR DATA WAS ALSO REJECTED BY THE AUTHORITIES BELOW. THE FIN AL LIST OF COMPARABLES WHICH WAS SELECTED BY THE TPO AND UPHELD B Y THE CIT(A) IS AS UNDER : S.NO. COMPANY PLI PLI AFTER RISK ADJUSTMENT 1 COSMIC GLOBAL LTD. 40.61% 38.61% 2 INFOSYS BPO LTD. 24.31% 22.31% 3 E4E - HEALTHCARE BUSINESS SERVICES PVT. LTD. (FORMERLY KNOWN AS NITTANY OUTSOURCING SERVICES PVT. LTD. 33.31% 31.31% 4 TECHPROCESS SOLUTIONS LTD. (PROCESSING SERVICES SEGMENT) 24.57% 22.57% 9 ITA NO.1739/PN/2014 5 IN HOUSE PRODUCTIONS LTD. 5.44% 5.44% 6 CAMEO CORPORATE SERVICES LTD. 14.56% 12.56% 7 SPARSH BPO SERVICES LTD. 4.03% 4.03% MEAN 20.97% 19.5% 9. THE ASSESSEE HAS ASSAILED INCLUSION OF 3 COMPANIES IN TH E LIST OF COMPARABLES, I.E. COSMIC GLOBAL LTD., INFOSYS BPO LTD., E4E- HEALTHCARE BUSINESS SERVICES PVT. LTD. IT IS OBSERVED TH AT COSMIC GLOBAL LTD. AND INFOSYS BPO LTD. WERE ORIGINALLY SELECTED B Y THE ASSESSEE IN TP STUDY. THE ASSESSEE HAD NOT TAKEN ANY OBJECTION FOR EXCLUDING BOTH THESE COMPANIES FROM THE LIST OF COMPARABLE S BEFORE TPO. IT WAS FOR THE FIRST TIME BEFORE THE CIT(A) THAT THE ASSESSEE HAD OBJECTED TO THE INCLUSION OF SAID COMPANIES IN THE LIST OF COMPARABLES. THE DEPARTMENT IS AGAINST SAID OBJECTION OF ASSESSEE. IT IS A WELL SETTLED LAW THAT THE ASSESSEE CAN RAISE OBJE CTION FOR INCLUSION OF COMPANY WHICH HAS BEEN WRONGLY SELECTED AT T HE TIME OF TP STUDY. THE SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF DCIT VS. QUARK SYSTEMS LTD. REPORTED AS 132 TTJ 1 (SB-CHANDIGARH ) HAS HELD THAT TAXPAYER IS NOT ESTOPPED FROM POINTING OUT A MISTAKE IN THE ASSESSMENT THOUGH SUCH MISTAKE IS THE RESULT OF EV IDENCE ADDUCED BY THE TAXPAYER. 10. WE FURTHER OBSERVE THAT THE ASSESSEE HAD GIVEN FRE SH LIST OF COMPARABLES BEFORE THE TPO. HOWEVER, THE TPO WITHOUT AN ALYZING THE SAME OUTRIGHTLY REJECTED THE FRESH LIST OF COMPARABLE S FURNISHED BY THE ASSESSEE. THE CIT(A) HAS ALSO FAILED TO CONSIDER TH E FRESH LIST OF COMPARABLES FURNISHED BY THE ASSESSEE. THE LD. AUTHOR ISED REPRESENTATIVE OF THE ASSESSEE HAS POINTED THAT THE TP O INCLUDED E4E-HEALTHCARE BUSINESS SERVICES PVT. LTD. IN THE LIST OF C OMPARABLES ALTHOUGH THE SAID COMPANY IS FUNCTIONALLY DIFFERENT. WE FIND T HAT THE ASSESSEE FOR THE FIRST TIME HAS OBJECTED TO THE INCLU SION OF E4E- 10 ITA NO.1739/PN/2014 HEALTHCARE BUSINESS SERVICES PVT. LTD. BEFORE THE TRIBUNAL. NO SUCH OBJECTION WAS LOGGED BY THE ASSESSEE EITHER BEFORE THE TPO OR THE CIT(A). 11. THE PURPOSE OF SELECTING COMPARABLES IS TO BENCHMARK THE INTERNATIONAL TRANSACTIONS OF THE ASSESSEE WITH UNCONTROLLE D TRANSACTIONS BETWEEN UNRELATED PARTIES UNDER SIMILAR CIRCUMSTANCES. A PERUSAL OF THE ORDERS OF THE AUTHORITIES BELOW SHOW THAT THE SELECTION OF COMPARABLES IN THE PRESENT CA SE HAS NOT BEEN MADE IN THE MANNER WHICH WOULD GIVE TRUE COMPARABLE ANALYSIS. INCLUSION OF THE COMPANIES IN THE FINAL LIST OF COMPA RABLES WHICH DO NOT FALL WITHIN THE PARAMETERS/CRITERION AND FAR ANALYSIS WOULD NOT GIVE CREDIBLE COMPARABILITY ANALYSIS. AS HAS BEE N POINTED BY BOTH SIDES MOST OF THE COMPANIES IN THE FINAL LIST OF COMP ARABLES FAIL TO QUALIFY THE FILTERS/CRITERIAS APPLIED TO SELECT THE CO MPANIES. OUT OF TOTAL SEVEN COMPANIES IN THE FINAL LIST OF COMPARABLES THE ASSESSEE HAS OBJECTED TO THREE COMPANIES, THE LD. DEPA RTMENTAL REPRESENTATIVE HAS POINTED THAT THE OTHER COMPANIES IN THE LIST ALSO FAIL TO QUALIFY THE FILTERS APPLIED. UNDER THESE CIRCUMSTANCE S, WE DEEM IT APPROPRIATE TO REMIT THE FILE BACK TO ASSESSING OF FICER FOR FRESH ANALYSIS BY SELECTING COMPARABLES WHICH FIT IN THE CR ITERIAS AND QUALIFY THE FILTERS SET FOR SELECTING THE COMPANIES AS COMPARABLES. 12. AS FAR AS USE OF MULTIPLE YEAR DATA IS CONCERNED WE WOULD LIKE TO POINT THAT RULE 10B(4) OF THE I.T. RULES, 1962 PRESCRIBE S USE OF SINGLE YEAR DATA, I.E. THE YEAR IN WHICH INTERNATIONAL TRANSA CTION HAS TAKEN PLACE. IT IS ONLY UNDER EXCEPTIONAL CIRCUMSTANCES AS SPECIFIED UNDER PROVISO TO RULE 10B(4) THAT DATA RELATING TO TWO Y EARS PRIOR TO THE FINANCIAL YEAR IN WHICH THE TRANSACTION HAS TAKEN PLAC E CAN BE 11 ITA NO.1739/PN/2014 USED. IF THE ASSESSEE INTENDS TO USE MULTIPLE YEAR DATA THE SAME SHOULD BE IN ACCORDANCE WITH THE PROVISIONS OF RULE 10B(4) O F THE I.T. RULES. 13. THE ASSESSEE HAS ALSO ASSAILED THE ADDITION MADE ON ACCOUNT OF ADHOC RISK ADJUSTMENT. THE CONTENTION OF THE ASSES SEE IS THAT NO COGENT REASON HAS BEEN GIVEN FOR RISK ADJUSTMENT OF 2%. WE ARE OF CONSIDERED VIEW THAT THE ASSESSING OFFICER SHALL RECONSIDER THE ISSUE OF RISK ADJUSTMENT. IF AT ALL RISK ADJUSTMENT IS TO BE APP LIED THE SAME SHOULD BE SUPPORTED BY COGENT REASONS AND ON VALID BASIS. 14. THE FILE IS REMITTED BACK TO THE ASSESSING OFFICER FOR FRE SH DETERMINATION OF ALP AFTER FRESH SELECTION OF COMPANIES AS COMPARABLES. THE COMPANIES SELECTED IN THE FINAL LIST OF COMPARABLES SHOULD QUALIFY THE FILTERS ALREADY SELECTED BY A SSESSEE. NEEDLESS TO SAY, THE ASSESSEE SHALL BE GIVEN SUFFICIENT OPPO RTUNITY OF HEARING BEFORE DECIDING THE ISSUE DENOVO. 15. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PAR TLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON WEDNESDAY, THE 14 TH DAY OF DECEMBER, 2016. SD/- SD/- (R.K. PANDA) (VIKAS AWASTHY) / ACCOUNTANT MEMBER ' / JUDICIAL MEMBER / PUNE ; ' DATED : 14 TH DECEMBER, 2016 . SATISH 12 ITA NO.1739/PN/2014 ( )'+ , / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. CIT(A), - I T/T P , NASHIK 4. CIT-I, PUNE 5. $ ''( , ( , / DR, ITAT, A PUNE; 6. , / GUARD FILE. / BY ORDER , //TRUE COPY// /0 ' ( / SR. PRIVATE SECRETARY ( , / ITAT, PUNE