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A financially unreliable company due to fraud by directors couldn't be chosen for comparability analysis

October 11, 2018[2018] 98 taxmann.com 52 (Mumbai - Trib.)
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IT/ILT: Where assessee was captive ITES service provider while comparable company was engaged in software development and no segmental data was available, said company was to be excluded from list of comparables

IT/ILT: Where assessee was a captive ITES service provider, while comparable company was engaged in software development activities as well as ITES and there was no segmental data for ITES sector and, hence, no feasible financial comparison as against that of assessee-company was possible, said company was to be excluded from list of comparables

IT/ILT: Where assessee was a captive ITES service provider while comparable company was engaged in business of providing translation services and most of its translation work was outsourced, said company was to be excluded from list of comparables

IT/ILT: Where export of turnover of comparable company was substantially less than 25 per cent of its total sales, being export filter applied by TPO for analyzing functional comparability, said company could not have been taken as a comparable

IT/ILT: Where financial results of comparable company are not reliable due to fraud committed by its directors, it should not be considered for comparability analysis

IT/ILT: Where assessee was a captive ITES service provider while related party transactions in case of comparable company was found to be in excess of 25 per cent said company could not have been selected as a comparable

IT/ILT: Detail of functional profile of comparable company along with assets employed and risk undertaken is to be examined for verifying its comparability

IT/ILT: Where business model of comparable company was different from that of assessee and unlike assessee which was providing its services to overseas customers, said company catered only to domestic segment, said company had rightly been rejected as a comparable

IT/ILT: Though certain activities of comparable company and assessee were found to be overlapping, activities of said company were related to domestic segment only, whereas assessee was providing services to overseas customers, they were not comparable

IT/ILT: Where export filter applied by TPO was 25 per cent export sales to total sales, rejection of comparable company which admittedly had export sales of less than 25 per cent of its total sales could not be faulted with

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