Company owning dissimilar assets be excluded from the list of final comparables for ALP by TPO - ADP Private Ltd. Vs DCIT

IN THE INCOME TAX APPELLATE TRIBUNAL
Hyderabad ‘ A ‘ Bench, Hyderabad
(Through Video Conferencing)
Before Smt. P. Madhavi Devi, Judicial Member
AND
Shri D.S. Sunder Singh, Accountant Member

ITA No.2233/Hyd/2018
Assessment Year:2014-15

M/s. ADP Private Ltd
Hyderabad
PAN:AANCA8983A
(Appellant) 

Vs.

Dy. Commissioner of
Income Tax, Circle 1(1)
Hyderabad
(Respondent)

Assessee by: Sri H. Srinivasulu
Revenue by: Sri Srinivas Reddy, DR

Date of hearing: 10/09/2020
Date of pronouncement: 18/12/2020

ORDER

Per Smt. P. Madhavi Devi, J.M.

This is assessee’s appeal for the A.Y 2014-15 against the final assessment order passed u/s 143(3) r.w.s. 92CA of the Act dated 30.10.2018.

2. Brief facts of the case are that the assessee company ADP (P) Ltd, is a captive service provider of its AE’s, i.e. it providessoftware development services (SDS in short) and I.T. EnabledServices (ITeS) to its group companies. It filed its return of income for the A.Y 2014-15 on 28.11.2014 declaring an income of Rs.144,21,34,890/- under the normal provisions and book profits of Rs.148,81,42,550/- u/s 115JB of the Act. During theassessment proceedings u/s 143(3) of the Act, the AO noticed that during the relevant financial year, the assessee has entered intointernational transactions with its Associated Enterprises (AEs).Therefore, the matter was referred to the TPO for determination ofthe Arms’ Length Price (ALP) of the international transactions. The TPO rejected the TP study of the assessee and conducted his ownsearch for the comparables for both SDS and ITeS and proposedadjustments to the ALP. Further, he also proposed adjustmenttowards interest on receivables. Thus, the total of the adjustmentproposed was Rs.122,56,40,217/- u/s 92CA of the Act. Accordingly, the draft assessment order was proposed by the AO. The assessee raised its objections to the said proposal before the DRP and the DRP vide directions dated 11.9.2018 gave certaindirections to the TPO which resulted in enhancement of theadjustment u/s 92CA of the Act from Rs.122,56,40,217/- toRs.128,64,17,966/-. In compliance thereof, the final assessmentorder has been passed, against which, the assessee is in appeal before us by raising the following grounds:

To know more in details find the attachment file