TP : Companies With Extreme Turnover Not to be included in Comparables

It is a common case that Satyam Computer Services Ltd. should not be taken into consideration. The tribunal for valid and good reasons has pointed out that Infosys Technologies Ltd. cannot be taken as a comparable in the present case. This leaves L&T Infotech Ltd. which gives us the figure of 11.11 %, which is less than the figure of 17% margin as declared by the respondent- assessee. This is the finding recorded by the tribunal. The tribunal in the impugned order has also observed that the assessee had furnished details of workables in respect of 23 companies and the mean of the com parables worked out to 10%, as against the margin of 17% shown by the assessee. Details of these companies are mentioned in para 5 of the impugned order.

In view of the aforesaid position, we do not think that any substantial question of law arises for consideration. The appeal is dismissed.

IN THE HIGH COURT OF DELHI AT NEW DELHI

Date of decision: 10^th July, 2013

ITA 1204/2011

CIT

Versus

AGNITY INDIA TECHNOLOGIES PVT LTD.

CORAM:

HONORABLE MR. JUSTICE SANJIV KHANNA

HONORABLE MR. JUSTICE SANJEEV SACHDEVA

SANJIV KHANNA, J. (ORAL)

This appeal by the Revenue, which pertains to the assessment year 2006-07, in the case of Agnity India Technologies Pvt. Ltd. raises a short issue. The respondent- assessee is a wholly owned subsidiary of Bay Packets Inc., USA and was/is engaged in the business of development of software for the parent company in the field of telecommunication. The respondent had filed return of income on 30^th November, 2006 declaring total income of Rs. 8,31,720/-. As respondent- assessee had undertaken international transactions with “Associated Enterprise”details of which were mentioned in the tax audit report, the matter was referred to Transfer Pricing Officer (TPO) to determine the fair market value of the international transactions. TPO opined that adjustment of Rs.3,73,74,985/- would be justified to bring it in line with arm‟s length value. Addition of the aforesaid amount was suggested in the draft assessment order which was examined by the Dispute Resolution Panel before whom the respondent- assessee had filed objections. Dispute Resolution Panel vide order dated 17^th June, 2010 directed the Assessing Officer to re‑compute the arm‟s length value by taking the ratio of operating profit to the total cost at 25.6%. This resulted in an addition of Rs.1,24,01,451/-.