Loss making companies cannot be rejected as comparables simplicitor on ground of losses but can be excluded on other comparability aspects

Yum Restaurants India Pvt. Ltd. v. ACIT (ITAT Delhi) –Since the taxpayer had applied filters in its TP report to reject persistent loss makers, the Tribunal questioned the basis of the taxpayer’s contention that other loss making comparables should not be rejected. Merely because a company is incurring losses, it would not lose its status as a comparable. Declaration of loss is an incidental of business which is at par with the profit. However, since the comparables were rejected by the TPO not only on the ground of losses but after analysis of their financial results using other tools...