M/s. PRISM Networks Private Limited, Bangalore V. Assistant Commissioner Of Income Tax, Circle-5(1)(2), Bangalore

ITA 349/BANG/2021

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 9019 (ITAT-BANGALORE)
• Duration Of Justice: 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: A
• Assessment Year: 2016-2017
• Appeal Filed On: 18-07-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 13

Judgement Text

IT(TP)A No.349/Bang/2021 Page 13 of 16 decisions referred to by the learned counsel for the Assessee supports the plea of the learned counsel for the Assessee. The decisions rendered in the case of M/S.NTT Data (supra), Societe Generale Global Solutions (supra) and LSI Technologies (supra) were rendered later in point of time. Those decisions follow the ratio laid down in Willis Processing Services (supra) and have to be regarded as per incurium. These three decisions also place reliance on the decision of the Hon’ble Delhi High Court in the case of Chriscapital Investment (supra). We have already held that the decision rendered in the case of Chriscapital Investment (supra) is obiter dicta and that the ratio decidendi laid down by the Hon’ble Bombay High Court in the case of Pentair (supra) which is favourable to the Assessee has to be followed. Therefore, the decisions cited by the learned DR before us cannot be the basis to hold that high turnover is not relevant criteria for deciding on comparability of companies in determination of ALP under the Transfer Pricing regulations under the Act. For the reasons given above, we uphold the order of the CIT(A) on the issue of application of turnover filter and his action in excluding companies by following the ratio laid down in the case of Genisys Integrating (supra). 14. In view of the aforesaid decision, we hold that 7 companies listed in Sl.No.(ii), (iii), (v), (vi) to (x) of Grd.No.6 raised by the Assessee whose turnover in the current year is more than Rs.200 Crores should be excluded from the list of comparable companies. 15. Apart from the exclusion of the comparable companies, the Assessee has also pleaded for inclusion of certain companies. The Assessee has raised ground No.7 in this regard which reads as follows: “7. The Ld. TPO / Ld. DRP erred in not accepting the assessee's contention of inclusion of following 6 companies which were considered by assessee as its comparables in the TP study. The Ld. TPO ought to have considered the availability of data and ought to have selected these companies as Comparable Companies. i.Sankhva Infotech Ltd. ii.Evoke Technologies Pvt Ltd IT(TP)A No.349/Bang/2021 Page 14 of 16 iii.Sasken Communication Technologies Ltd. iv.Insummation Technologies Pvt Ltd v.Kireeti Soft Technologies Ltd vi.Maveric Systems Ltd.” 16. At the time of hearing, learned Counsel for the Assessee submitted that out of 6 comparable companies set out in ground No.7, he would press for adjudication for inclusion of 5 companies except Sasken Communication Technologies Ltd. As far as inclusion of the aforesaid 5 companies are concerned, the Assessee included the aforesaid 5 companies in its TP study as comparable companies. The TPO did not accept them as comparable companies for the reason that the data with reference to these companies was not available in the public domain. In the objections filed before the DRP, the Assessee specifically pointed out that the data relating to these companies are available in the public domain and has also filed the details in the submissions before the DRP and the same was captured as follows: A3 Comparables filtered by Assessee: Rejected by TPO -- whose rejections are objected by Assessee Sl. No. Name of the Comparable Margin (PL1) TPO's contentions Assessee's contentions 1 Sankhya Infotech Ltd. Assessee : 4.46% [Same contention for 6 companies] Data not available in public domain. Hence rejected [Same contention for 6 companies] Objection No.6 (as part of Form 35A, submitted on 12- Mar-2020] Screenshot of initial dump obtained from Capitaline database was shared with TPO. All these companies' annual reports are available as public documents in the website of Ministry of Corporate Affairs (MCA). All these companies have their respective websites as well. Copies of Annual reports are provided in Appendix to Objections in the Paperbook, as follows: 2 Evoke Technologies Pvt Ltd Assessee : 6.56% 3 Sasken Communication Technologies Ltd Assessee : 6.94% 4 Isummation Technologies Pvt Ltd Assessee : 9.57% 5 Kireeti Soft Technologies Ltd Assessee : 9.73% 6 Maveric Systems Ltd Assessee : 9.64%