What are the appropriate risk adjustments as warranted under Rule 10B of the Income-tax Rules, 1962?

IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH: ‘I-1’ NEW DELHI

BEFORE SHRI N. K. BILLAIYA, ACCOUNTANT MEMBER
AND
MS SUCHITRA KAMBLE, JUDICIAL MEMBER

I.T.A. No. 2423/DEL/2017 (A.Y 2010-11)
(THROUGH VIDEO CONFERENCING)

Dunnhumby IT Services India Pvt.
Ltd. 4th Floor, Paras Twin Tower,
Tower-B
Golf Course Road, Sector-54
Gurgaon
AACCD6863H
(APPELLANT)

Vs 

DCIT
Circle-10(1)
New Delhi
(RESPONDENT) 

I.T.A. No. 2815/DEL/2017 (A.Y 2010-11)

JCIT
Special Range-3,
New Delhi
(APPELLANT)

Vs 

Dunnhumby IT Services
India Pvt. Ltd. 4th Floor,
Paras Twin Tower, S-22,
Great Kailash, Part-1
AACCD6863H
 (RESPONDENT) 

Appellant by Sh. Rajesh Sachdev, Adv &
Mr. Manish Bawa, CA
Respondent by Sh. Anurag Sharma, Sr. DR
Date of Hearing 22.02.2021
Date of Pronouncement 26.04.2021

ORDER

PER SUCHITRA KAMBLE, JM

These two appeals are filed by the assessee and the Revenue against the order dated 17/11/2016 passed by the CIT(A)- 44, New Delhi for Assessment Year 2010-11.

2. The grounds of appeal are as under:-

I.T.A. No. 2423/DEL/2017 (Assessee’s appeal)
 
In view of the facts of the case and relevant legal provisions under the Income-tax Act, 1961 ('the Act'), the taxpayer-appellant believes that the impugned order of the Commissioner of Income-tax (Appeals) - 44, New Delhi ['Ld. CIT(A)'] dated November 17, 2016 is not sustainable in the eyes of law since:

1. Ld. CIT(A) erred in misconstruing the functional and risk profile of the Appellant;

2. Ld. CIT(A) erred in terms of approving the Transfer Pricing Officer's ('TPO') approach of summarily rejecting the comparables selected by the Appellant, selecting erroneous filters and functionally dissimilar companies while applying Transactional Net Margin Method;

3. CIT(A) erred in arbitrarily rejecting the comparable company, viz. R Systems international Limited on the ground that audited data on quarterly basis from where profit-level indicator (PLI) can be re-casted on a financial year (running April 01, 2009 to March 31, 2010) basis had not been provided;

4. Ld. CIT(A) erred in arbitrarily approving the TPO's approach of selecting the companies, viz. TCS E-Serve International Limited and TCS E-Serve Limited by misquoting assessee's functional profile;

5. Ld. CIT(A) erred in upholding the TPO's approach of computing net cost plus margin ('NCPM') of selected companies and that of Appellant by incorrectly classifying gain/ loss from foreign exchange variation and provision for doubtful debts as a non-operating in nature;

6. Ld. CIT(A) erred in not granting appropriate risk adjustments as warranted under Rule 10B of the Income-tax Rules, 1962 ('the Rules');

7. Ld. CIT(A) erred in upholding the Ld. TPO's approach of considering thirdparty cost recoveries from associated enterprises ('AE') for the purpose of applying the mark-up;

8. Ld. CIT(A) erred in upholding the Ld. TPO's approach of treating outstanding receivables from the AE as an unsecured loan and charging interest thereon.

The above grounds of appeal are without prejudice and notwithstanding each other.” 

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