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The Pr. Commissioner Of Income Tax vs. Macquarie Global Services Pvt. Ltd. - (High Court of Delhi) (22 Sep 2022)

Inclusion or exclusion of comparables per se cannot be treated as a question of law unless it is demonstrated that the Tribunal took into account irrelevant consideration


Direct Taxation

Present appeal has been filed seeking a direction for setting aside the order passed by the Income Tax Appellate Tribunal ('ITAT') in with respect to Assessment Year ('AY') 2011-12.

The learned Senior Standing Counsel for the Appellant/Revenue states that, the ITAT fell in error in holding that the Assessee is not a Knowledge Processing Outsourcing Unit ('KPO') whereas the Assessee itself in the transfer pricing study report had declared that it is engaged in KPO activities. He states that, the ITAT erred in rejecting eClerxservices as a comparable as it ignored the fact that the said comparable provides Data Analysis and Outsourcing Services which are a part and parcel of the ITES Segment. He states that similarly ITAT fell in error in rejecting ICRA Techno Analytics Ltd. as a comparable whereas this company provides IT enabled services. He further states that ITAT fell in error in applying the high turnover threshold limit while excluding the comparable as it failed to appreciate that margins in the ITES industry are not linked to the turnover of the company.

The ITAT as well in the impugned order has after examining the financial and annual reports of each of the four comparables, concurred with the DRP's finding that each of the four comparables are functionally dissimilar. With respect to Accentia Technologies Ltd., the ITAT considered that the said comparable has also been excluded in Assessee's own case in AY 2009-10. It has also come on record that similarly, eClerxservices was also excluded as a comparable during the AY 2009-10. The ITAT has recorded that admittedly, there has been no change in the functions performed by the Assessee for the earlier years and in AY 2009-10 when the said comparables were excluded in the case of the Assessee after analyzing its functional profile.

The ITAT and the DRP have thus, returned concurrent finding of facts with respect to the functional dissimilarities of the said four comparables with the Assessee. In the present appeal, the challenge is to the said finding of facts and there is no perversity in the said findings. The Revenue has not been able to demonstrate that the analysis done by ITAT and DRP while excluding the companies suggested by Revenue from the list of comparables, was in any manner contrary to the settled position in law.

This Court in Pr. Commissioner of Income Tax-9 vs. WSP Consultants India Pvt. Ltd., has held that inclusion or exclusion of comparables per se cannot be treated as a question of law unless it is demonstrated to the Court that the Tribunal took into account irrelevant consideration or excluded irrelevant factors in the ALP that impact significantly. The ITAT has not committed any perversity or applied incorrect principle to the given facts. Therefore, present Court do not find that any substantial questions of law arise for consideration in the present appeal. Appeal dismissed.


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