Section 92C A fraudulent company can't be chosen as comparable

A fraudulent company can't be chosen as comparable for TP study as its financial results aren't reliable

[2015] 57 taxmann.com 368 (Pune - Trib.)

IN THE ITAT PUNE BENCH 'B'

Oceans Connect (I) (P.) Ltd.

v.

Assistant Commissioner of Income-tax, Circle-1 (2), Pune

Section 92C of the Income-tax Act, 1961 - Transfer pricing - Computation of arm’s length price (Comparables and adjustments/Comparables - Illustrations) - Assessment year 2005-06 - Assessee was a wholly owned subsidiary of 'O' Ltd., UK - It was set up to provide call centre services to its parent company - Assessee had charged its Associate Enterprise at cost + 12 per cent basis - TPO on basis of average profit margin earned by two comparables selected by him, made certain addition to assessee's ALP - Whether since companies selected by TPO were involved in fraud on account of which their financial results could not be considered as correct and reliable, impugned addition was to be set aside and, matter was to be remanded back for disposal afresh - Held, yes [Para 16][In favour of assessee/Matter remanded]