“comparable companies”

Transfer PricingSection 92CSection 92C1,304 judgments

The decision most relied on for comparable companies is Rampgreen Solutions Pvt. Ltd. v. CIT (377 ITR 533), cited in 196 judgments on BharatTax.

Leading authorities on comparable companies

Rampgreen Solutions Pvt. Ltd. v. CIT

377 ITR 533 · 2015 · High Court

196

citing judgments

Knowledge Process Outsourcing (KPO) service providers are functionally dissimilar to Business Process Outsourcing (BPO) or Information Technology Enabled Services (ITeS) providers and cannot be compared for transfer pricing purposes, even under the Transactional Net Margin Method (TNMM). Further, companies with significantly different business models, such as those with extensive subcontracting, should be excluded as comparables.

DCIT v. Quark Systems (P.) Ltd.

38 SOT 307 · 2010 · ITAT

179

citing judgments

An assessee is not estopped or precluded from seeking the exclusion of a company from its Transfer Pricing study comparables, even if initially selected, if it can demonstrate valid reasons for non-comparability.

CIT v. Agnity India Technologies (P.) Ltd.

36 Taxmann.com 289 · 2013 · High Court

171

citing judgments

The Delhi High Court holds that Infosys Ltd. is not comparable to a captive software development service provider for transfer pricing analysis, given its huge turnover, high profit margins, ownership of intangible intellectual property rights, branded products, and differing risk profile.

Chryscapital Investment Advisors (India) Pvt. Ltd. v. DCIT

376 ITR 183 · 2015 · High Court

170

citing judgments

For transfer pricing comparability analysis, companies should not be excluded solely based on higher turnover if they are otherwise functionally comparable, unless the turnover difference reflects fundamental functional dissimilarities, brand value, or risk profiles that materially impact profitability.

Autodesk India Pvt.Ltd. v. DCIT

96 Taxmann.com 263 · 2018 · ITAT

116

citing judgments

A high turnover criterion, such as above Rs. 200 crores, is a valid ground to exclude companies from the list of comparable companies in a transfer pricing analysis, as such companies are not comparable to those with significantly lower turnover.

SAP Labs India Pvt. Ltd. v. ACIT

44 SOT 156 · 2011 · ITAT

100

citing judgments

Foreign exchange fluctuation gains or losses are operational in nature and must be included in the computation of the operating margin for both the assessee and comparable companies when determining the Arm's Length Price.

Mentor Graphics (Noida) (P) Ltd. v. DCIT

109 ITD 101 · 2007 · ITAT

citing judgments

A working capital adjustment is mandated and a prerequisite for correctly determining the Arm's Length Price (ALP) under Rule 10B(1)(e) and Rule 10B(3) of the Income Tax Rules, 1962. This adjustment accounts for differences in working capital and outstanding receivables between the assessee and comparable companies.

Avenue Asia Advisors Pvt. Ltd. v. DCIT

398 ITR 120 · 2017 · High Court

citing judgments

The Delhi High Court holds that a detailed functional and working capital analysis, considering various factors, is essential before treating outstanding receivables as a separate international transaction for transfer pricing adjustments on notional interest. Simply making an adjustment based on receivables alone without such study distorts the transaction's character.

Judgments citing comparable companies

Concentrix Daksh Services India Pvt. Ltd., Gurgaon vs. ACIT, Circle-4(2), New Delhi

In the result, the appeal of the assessee is partly allowed

ITA 485/DEL/2021[2016-17]Status: DisposedITAT Delhi05 Mar 2024AY 2016-17

Bench: Sh. Saktijit Dey, Vice-Dr. B. R. R. Kumar

For Appellant: Sh. Ankul Goyal, AdvFor Respondent: Sh. Rajesh Kumar, CIT(DR)

Section 143(3)Section 92C

DRP/Learned AO/Learned TPO has determined the primary international transaction at an arm's length price after considering working capital adjusted margins of comparable companies, no separate adjustment can be made for such inter-company receivables and the same has been favourably upheld by the Hon'ble ITAT in Appellant ... transaction of provision of ITS are closely linked and as TPO has determined the International transactions at ALP considering working capital adjusted margins of comparable company's, no separate adjustment should be made.  Working capital adjustment takes into account the impact of outstanding receivables on profitability and therefore, no further

Pr. CIT-9, Mumbai vs. M/S Best Seller Fashion India Pvt Ltd., Mumbai

In the result, appeal of the AO is dismissed

ITA 4783/MUM/2019[2012-13]Status: DisposedITAT Mumbai29 Feb 2024AY 2012-13

Bench: Shri Prashant Maharishi, Am & Shri Sandeep Singh Karhail, Jm M/S Best Seller Fashion India Pr. Cit-9 Pvt. Ltd. Room No.65A, 6Th Floor, Lalit Residency, 1 St Floor, Aaykar Bhavan, The Lalit Mumbai, Vs. M.K. Road, Sahar Airport, Sahar, Churchgate-400 020 Andheri(E), Mumbai-400 059 (Appellant) (Respondent) Pan No. Aaecb2906M Assessee By : Shri Harsh Kumar & Shri Jabir Contractor, Ar Revenue By : Shri B.K. Bagchi, Dr Date Of Hearing: 30.01.2024 Date Of Pronouncement : 29.02.2024

For Appellant: Shri Harsh Kumar &For Respondent: Shri B.K. Bagchi, DR

Section 143(3)

most appropriate method, compared the gross profit as ratio of direct cost of goods sold as PLI, used prowess data base, selected five comparable companies whose markup on cost was determine at 17.73% and assessee’s markup was 15.93% and therefore, it was stated to be at Arm's Length ... debited the net amount of ₹ 40,058,128 in the profit and loss account. Therefore, the learned transfer-pricing officer asked that whether the comparable companies selected by the assessee were also performing the advertisement marketing and distribution expenses with the same intensity. On analysis of the details submitted

The Boston Consulting Group India P.Ltd, Mumbai vs. DCIT Cir 3(3)(2), Mumbai

In the result, appeal filed by the assessee is partly allowed

ITA 1760/MUM/2015[2010-11]Status: DisposedITAT Mumbai28 Feb 2024AY 2010-11

Bench: Shri Amit Shukla, Hon'Ble & Shri S. Rifaur Rahman, Hon'Blethe Boston Consulting Group (India) V. Dcit – 3(3)(2) Private Limited Aayakar Bhavan, M.K. Road 14Th Floor, Nariman Bhavan Mumbai - 400020 227, Nariman Point Mumbai - 400021 Pan: Aabcb3524G (Appellant) (Respondent) Assessee Represented By : Shri J.D. Mistri Department Represented By : Shri Rajesh Pardeshi

Section 144C(5)Section 234DSection 244ASection 271(1)(c)Section 92C

most appropriate method to substantiate the Arm’s Length Price. The Assessee has earned an OP/TC of 7.5% in this transaction against 10.92% of comparable companies. Assessee has selected following comparables to benchmark the same: PLI(OP/TC) Sr.No Company Name FY 2009-10 1. Akruti Center Infotech

Jamshedpur Continuous Annealing & Processing Company Pvt. Ltd., Kolkata vs. ITO, National E-Assessment Centre, Delhi

In the result, both the appeals filed by the assessee in ITA No

ITA 295/KOL/2022[2018-19]Status: DisposedITAT Kolkata26 Feb 2024AY 2018-19

Bench: Dr. Manish Borad&Shri Anikesh Banerjee]

Section 143(3)Section 144C(5)Section 154Section 270A

revenue, vis the year under consideration was 16.92% of its revenue, vis-a-vis depreciation of vis depreciation of 4.85% of seven comparable companies (taken by the TPO) which in most cases as 4.85% of seven comparable companies (taken by the TPO) which in most cases as 4.85% of seven ... comparable companies (taken by the TPO) which in most cases as average depreciation as a percentage of revenue en in the average depreciation as a percentage of revenue en in the table below. The assessee table below. The assessee also stated that as per rule

Jamshedpur Continuous Annealing & Processing Company Private Limited, Kolkata vs. National E-Assessment Centre, Delhi

In the result, both the appeals filed by the assessee in ITA No

ITA 595/KOL/2021[2017-18]Status: DisposedITAT Kolkata26 Feb 2024AY 2017-18

Bench: Dr. Manish Borad&Shri Anikesh Banerjee]

Section 143(3)Section 144C(5)Section 154Section 270A

Supermax Personal Care P. Ltd., Thane vs. Dy CIT -3(4), Mumbai

In the result, all the three appeals filed by the assessee are dismissed in above terms

ITA 687/MUM/2021[2016-17]Status: DisposedITAT Mumbai26 Feb 2024AY 2016-17

Bench: Ms. Kavitha Rajagopal & Shri Gagan Goyal

For Appellant: Shri Subhash Gupta & Shri AjinkyaFor Respondent: Shri Rajesh Kumar Yadav, Ld. DR

Section 250Section 32(1)Section 32(1)(iia)Section 92C

from a similar uncontrolled transaction and thereby rejecting internal Transactional Net Margin Method ("TNMM") as the most appropriate method ('MAM'). Inappropriate acceptance of non- comparable companies and cherry-picking of comparable companies Supermax Personal Care Pvt. Ltd., 5. without prejudice to the above, erred in including following companies as comparables ... above, appropriate economic adjustment should be granted to the Appellant for differences such as working capital employed by the Assessee vis a vis comparable companies. Addition on account of corporate tax adjustments Disallowance of additional depreciation under section 32(1) (iia) of the Act amounting

Shree Cement Limited, Beawar vs. National Faceless Assessment Centre, Delhi

In the result, the appeal of the Revenue in ITA No

ITA 500/JPR/2023[215-16]Status: DisposedITAT Jaipur21 Feb 2024

Bench: or at the time of hearing of this appeal.

For Appellant: Sh. Dilip B Desai(C.A.)For Respondent: Sh. Alka Gautam (CIT) (V.H) &

Section 115JSection 143Section 143(3)Section 144BSection 144B(1)(xvi)Section 80Section 80I

profit split method adopted by the assessee and proceeded to apply the Transaction Net Margin Method by applying the margin earned by the comparable companies. On this issue after considering the finding ACIT vs. Shree Cement Ltd. of the TPO and that of the assessee

Shree Cement Limited, Beawar vs. National Faceless Assessment Centre, Deputy Commissioner of Income Tax, Circle -2, Ajmer

ITA 498/JPR/2023[2018-19]Status: DisposedITAT Jaipur21 Feb 2024AY 2018-19

For Appellant: Sh. Dilip B Desai(C.A.)For Respondent: Sh. Alka Gautam (CIT) (V.H) &

Section 115JSection 143Section 143(3)Section 144B(1)(xvi)Section 80Section 80I

profit split method adopted by the assessee and proceeded to apply the Transactional Net Margin Method by applying the margin earned by the comparable companies. On this issue after considering the finding of the TPO and that of the assessee the ld. CIT(A) has decided this issue by observing

Shree Cement Limited, Beawar vs. National Faceless Assessment Assessment Centre, Deputy Commissioner of Income Tax, Circle-2, Ajmer

ITA 497/JPR/2023[2017-18]Status: DisposedITAT Jaipur21 Feb 2024AY 2017-18

Section 115JSection 143Section 143(3)Section 144B(1)(xvi)Section 80Section 80I

profit split method adopted by the assessee and proceeded to apply the Transaction Net Margin Method by applying the margin earned by the comparable companies. On this issue after considering the finding of the TPO and that of the assessee the ld. CIT(A) has decided this issue by observing

Shree Cement Limited, Beawar vs. National Faceless Assessment Centre, Deputy Commissionerof Income Tax, Circle -2, Ajmer

In the result, the appeal of the Revenue in ITA No

ITA 496/JPR/2023[2016-17]Status: DisposedITAT Jaipur21 Feb 2024AY 2016-17

Bench: or at the time of hearing of this appeal.

For Appellant: Sh. Dilip B Desai(C.A.)For Respondent: Sh. Alka Gautam (CIT) (V.H) &

Section 115JSection 143Section 143(3)Section 144BSection 144B(1)(xvi)Section 80Section 80I

Assisstant Commissioner of Income Tax, Ajmer vs. Shree Cement Ltd, Beawar

ITA 490/JPR/2023[2016-17]Status: DisposedITAT Jaipur21 Feb 2024AY 2016-17

Section 115JSection 143Section 143(3)Section 144B(1)(xvi)Section 80Section 80I

Assisstant Commissioner of Income Tax, Ajmer vs. Shree Cement Ltd, Beawar

ITA 489/JPR/2023[2015-16]Status: DisposedITAT Jaipur21 Feb 2024AY 2015-16

For Appellant: Sh. Dilip B Desai(C.A.)For Respondent: Sh. Alka Gautam (CIT) (V.H) &

Section 115JSection 143Section 143(3)Section 144B(1)(xvi)Section 80Section 80I

profit split method adopted by the assessee and proceeded to apply the Transaction Net Margin Method by applying the margin earned by the comparable companies. On this issue after considering the finding ITA Nos. 489 to 492/JP/2023 ACIT vs. Shree Cement Ltd. 13 of the TPO and that

M/S. Linde India Limited (Formerly Boc India Limited), Kolkata vs. DCIT, Circle 12(1), Kolkata

In the result, the appeal of the assessee bearing ITA No

ITA 381/KOL/2017[2012-13]Status: DisposedITAT Kolkata19 Feb 2024AY 2012-13

Bench: Dr. Manish Borad & Shri Anikesh Banerjee

Section 143(3)Section 144CSection 154Section 92CSection 92C(3)

needs o be made to the international transactions of the Assessee; 3.2. The TPO erred on facts and in law in rejecting the comparable companies arrived at in the Transfer Pricing Study without considering the functional and risk analysis of the Assessee; 3.3. The TPO erred ... facts in disregarding the application of multiple-year data while computing the margins of alleged comparable companies; Directions: DRP has duly considered submissions of the assessee. It is seen that TPO has rejected economic analysis of the assessee after giving cogent reasons in para 34 of his order. Further

Brandix Apparal India Private Limited, Visakhapatnam vs. The Assistant Commissioner of Income Tax, Circle - 5(1), Visakhapatnam

In the result, appeal of the assessee is partly allowed for

ITA 627/VIZ/2018[2014-15]Status: DisposedITAT Visakhapatnam13 Feb 2024AY 2014-15

Bench: Shri Duvvuru Rl Reddy, Hon’Ble & Shri S Balakrishnan, Hon’Ble(Through Hybrid Hearing) आयकरअपीलसं./ I.T.A. No.627/Viz/2018 ("नधा"रणवष"/ Assessment Year : 2014-15) Brandix Apparel India Private Vs. Assistant Commissioner Of Limited, Income Tax, Apsez, Pudimadaka Road, Circle-5(1), Atchutapuram Mandal, Visakhapatnam. Visakhapatnam – 530011. Pan: Aaccb 6569 L (अपीलाथ"/ Appellant) (""यथ"/ Respondent) अपीलाथ"क"ओरसे/ Assessee By : Sri Darpan Kriplani ""याथ"क"ओरसे/ Revenue By : Dr. Satyasai Rath, Cit-Dr

For Appellant: Sri Darpan KriplaniFor Respondent: Dr. Satyasai Rath, CIT-DR

Section 10ASection 142(1)Section 143(2)Section 143(3)Section 92C

available in the public domain at the time of preparing the TP documentation. 4.5. Not considering the multiple year / prior year data of comparable companies while determining the arm’s length price in relation to the appellant’s international transactions with its AEs. 4.6. Characterizing the appellant as in entrepreneur ... operating in nature on the premise that these are not the routine operating costs in determining the operating mark-up of the comparable companies. 4.11. Considering foreign exchange loss as operating in nature while determining the mark-up on cost of the appellant. 4.12. Not providing appropriate adjustments towards material

Teejay India Private Limited, Visakhapatnam vs. The Assistant Commissioner of Income Tax, Circle - 5(1), Visakhapatnam

In the result, the appeal of the assessee is partly allowed for

ITA 626/VIZ/2018[2014-15]Status: DisposedITAT Visakhapatnam13 Feb 2024AY 2014-15

Bench: Shri Duvvuru Rl Reddy, Hon’Ble & Shri S Balakrishnan, Hon’Ble(Through Hybrid Hearing) आयकर अपील सं./(I.T.)I.T.A.No.626/Viz/2018 (िनधा"रण वष" / Assessment Year : 2014-15) Teejay India Private Limited Vs. Asst.Commissioner Of Apsez, Pudimadaka Road Income Tax Atchutapuram Mandal Circle-5(1) Visakhapatnam Visakhapatnam [Pan : Aaaco9452H] (अपीलाथ"/ Appellant) (""थ"/ Respondent) अपीलाथ" की ओर से/ Appellant By : Shri Darpan Kirpalani ""ाथ" की ओर से / Respondent By : Dr.Satyasai Rath, Cit(Dr) सुनवाई की तारीख / Date Of Hearing : 22.01.2024 घोषणा की तारीख/Date Of Pronouncement : 13.02.2024 आदेश /O R D E R Per Shri Balakrishnan S

For Appellant: Shri Darpan KirpalaniFor Respondent: Dr.Satyasai Rath, CIT(DR)

Section 142(1)Section 143(1)Section 143(2)Section 143(3)

available in the public domain at the time of preparing the TP documentation. 4.5. Not considering the multiple year/prior year data of comparable companies while determining the arm’s length price in relation to the Appellant’s International transactions with its Associated Enterprises (‘AEs’). 4.6. Including companies that are functionally ... wherein principle of transfer pricing is not applied. 4.11. Not providing appropriate adjustments towards material differences between the operational profile of comparable companies and the Appellant. Grounds for imputation of notional interest on outstanding receivables 5. On facts and in the circumstances of the case, the learned DRP/AO/TPO erred

Teejay India Private Limited., Visakhapatnam vs. The ACIT, Visakhapatnam

In the result, appeal of the assessee is partly allowed for

ITA 44/VIZ/2017[2012-2013]Status: DisposedITAT Visakhapatnam13 Feb 2024AY 2012-2013

Bench: Shri Duvvuru Rl Reddy, Hon’Ble & Shri S Balakrishnan, Hon’Ble(Through Hybrid Hearing) आयकरअपीलसं./ I.T.(Tp).A. No.44/Viz/2017 ("नधा"रणवष"/ Assessment Year : 2012-13) Teejay India Private Limited, Vs. Assistant Commissioner Of Plot No. 15, Brandix India Apparel Income Tax, City Private Limited Sez, Circle-5(1), 2Nd Floor, Direct Pudimadaka Road, Atchutapuram, Taxes Building, Mvp Double Visakhapatnam – 530 011. Road, Visakhapatnam, Pan: Aaaco 9452 H Andhra Pradesh. (अपीलाथ"/ Appellant) (""यथ"/ Respondent) अपीलाथ"क"ओरसे/ Assessee By : Sri Darpan Kirpalani ""याथ"क"ओरसे/ Revenue By : Dr. Satyasai Rath, Cit-Dr

For Appellant: Sri Darpan KirpalaniFor Respondent: Dr. Satyasai Rath, CIT-DR

Section 12Section 143(2)Section 143(3)Section 92C

sources. The Ld. TPO has not disputed the TNMM Method as the Most Appropriate Method (MAM). The Ld. TPO has also accepted the 15 comparable companies selected by the assessee. The Ld. TPO computed the Arithmetic Mean of the comparable companies based on the independent analysis 4 considering the single ... assessee before the Ld. DRP is with respect to the Ld. TPO’s decision in not considering the multiple year / prior year data of comparable companies while determining the Arm’s Length Price in relation to the assessee’s international transactions with its AEs. Further, the assessee also objected that

Castrol India Ltd, Mumbai vs. NFAC, Delhi

In the result, the issue under consideration is remitted back to the file of Assessing Officer for statistical purpose

ITA 2433/MUM/2022[2018-19]Status: DisposedITAT Mumbai07 Feb 2024AY 2018-19

Bench: Shri Vikas Awasthy, Hon’Ble & Shri S. Rifaur Rahman, Hon'Blecastrol India Limited V. National Faceless Appeal Centre Technopolis Knowledge Park Delhi Mahakali Caves Road Chakala, Andheri (E) Mumbai – 400093 Pan: Aaacc4481E (Appellant) (Respondent) Assessee Represented By : Shri Dhanesh Bafna, Ms. Chandni Shah, Shri Hardik Nirmal & Ms. Riddhi Maru Department Represented By : Ms. A. Alankrutha

Section 115Section 143(3)Section 144C(5)Section 92C

used TNMM as a corroborative method to compare the operating margin of the assessee with comparable lubricant companies. Accordingly, it selected eight (8) comparable companies in its TP study report and the same is listed at Page No. 7 of the Transfer Pricing Officer order and average OP/sales was determined

Honda Motorcycle and Scooter India Pvt. Ltd., Gurgaon vs. ACIT, Circle-1(1), Gurugram

In the result, appeal is partly allowed

ITA 1524/DEL/2022[2018-19]Status: DisposedITAT Delhi05 Feb 2024AY 2018-19

Bench: Shri Saktijit Dey, Vice- & Shri Pradip Kumar Kediaassessment Year: 2018-19

For Appellant: Sh. Harpreet Singh Ajmani, AdvFor Respondent: Sh. Rajesh Kumar, CIT-DR

Section 143(3)Section 92C

Under TNMM analysis the operating profit ratio of the assessee @ 4.60% was higher than average of operating margin of -2.24% earned by the comparables companies. Considering that the operating profit margin 7 of the selected comparable companies was lower than the OPM of the assessee, such international transactions were considered

Yokogawa India Limited, Bangalore vs. Deputy Commissioner of Income Tax Large Taxpayers Unit, Bangalore

In the result, the appeal by the assessee is partly allowed

ITA 2088/BANG/2017[2013-14]Status: DisposedITAT Bangalore01 Feb 2024AY 2013-14

Bench: Shri George George K. & Shri Laxmi Prasad Sahu

For Appellant: Shri Nageshwar Rao, AdvocateFor Respondent: Ms. Neera Malhotra, CIT(DR)(ITAT), Bengaluru

Section 143(3)Section 14A

make huge unjustified adjustment under provisions of Chapter X: • Adtech Systems Limited • Zicom Electronic Security Systems Limited 4. Impugned order erroneously rejects the following comparable company identified by the Applicant on the reasoning that the same is a government company: • Telecommunication Consultants India Limited 5. Impugned order erroneously computes adjustment ... Consultants India Ltd. ("TCIL") as comparable; (iii) inclusion of Adtech Systems Ltd. ("Adtech") and Zicom Electronic Security Systems Ltd. ("Zicom") in final set of comparable companies; and (iv) incorrect exclusion of `commission income' and reversal of provisions for doubtful debts from operational income for computing tested party margin. 3. Kind

M/S Glenmark Pharmaceuticals Ltd., Mumbai vs. DCIT (Ltu)-1, Mumbai

In the result, the appeal filed by the assessee is partly allowed

ITA 575/MUM/2020[2014-15]Status: DisposedITAT Mumbai01 Feb 2024AY 2014-15

Bench: Shri B.R. Baskaran (Am) & Shri Rahul Chaudhary (Jm)

Section 144ASection 32ASection 35Section 37(1)Section 80I

this peculiar situation, the assessee has selected both the foreign AEs as tested parties and compared their profitability with the profitability of foreign comparable companies. Since the AEs are buying products from the assessee company, their profitability would increase, if the assessee sells products to them at lower rates ... profitability will all. Hence, for the purpose of transfer pricing provisions qua the assessee, the AEs should earn profit less than the profitability of comparable companies, which would mean that the assessee has not under invoiced its products, i.e., the sale to AEs is at arms length