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The Tax Publishers CIT v. Pentair Water India (P) Ltd. [Tax Appeal No. 18 of 2015, dt. 16-9-2015] : 2015 TaxPub(DT) 5492 (Bom-HC) Application of TP comparables ignoring turnover filter *Facts:* Assessee was in the business of manufacturing fibre glass water treatment pressure vessels during assessment year 2007-08 had transactions with AEs had adopted TNMM method. TPO made additions adopting certain comparables without applying turnover filter the appeal of which also stood dismissed by ITAT favouring assessee thus the departmental appeal with the high court. Contention of the assessee was that addition was not sustainable as the comparables of the TPO Infosys Ltd., Wipro Ltd., HCL Comnet Ltd. were taken ignoring profits, costs, functions, risks which were different to the business model of the assessee + fact finding of ITAT cannot be questioned by high court. Held by the high court that the ITATs speaking order indicated why the comparables need to be ignored as they were substantially different on the turnover. Thus turnover criteria filter itself was not applied by TPO. The appeals of department thus warrant dismissal (in favour of assessee). Decisions read into for application of Turnover filter criteria: Sony India (P) Ltd. v. DCIT, [114 ITD 448 Delhi] E-Gain Communication 2008 [TIOL 282 ITAT (Pune)] Deloittee Consulting India Pvt. Ltd. v. DCIT, [ITA No. 1082/Hyd/2010] Genisys Integrating System (India)(P.) Ltd. v. DCIT, [53 Sot 159 (Bang)] *Decision applied:* CIT v. Agnity India Technologies (P.) Ltd. [(2013) 36 taxmann.com 289 (Delhi)]

The Tax Publishers

CIT v. Pentair Water India (P) Ltd. [Tax Appeal No. 18 of 2015, dt. 16-9-2015] : 2015 TaxPub(DT) 5492 (Bom-HC)

Application of TP comparables ignoring turnover filter

Facts:

Assessee was in the business of manufacturing fibre glass water treatment pressure vessels during assessment year 2007-08 had transactions with AEs had adopted TNMM method. TPO made additions adopting certain comparables without applying turnover filter the appeal of which also stood dismissed by ITAT favouring assessee thus the departmental appeal with the high court. Contention of the assessee was that addition was not sustainable as the comparables of the TPO Infosys Ltd., Wipro Ltd., HCL Comnet Ltd. were taken ignoring profits, costs, functions, risks which were different to the business model of the assessee + fact finding of ITAT cannot be questioned by high court.

Held by the high court that the ITATs speaking order indicated why the comparables need to be ignored as they were substantially different on the turnover. Thus turnover criteria filter itself was not applied by TPO. The appeals of department thus warrant dismissal (in favour of assessee).

Decisions read into for application of Turnover filter criteria:

Sony India (P) Ltd. v. DCIT, [114 ITD 448 Delhi]

E-Gain Communication 2008 [TIOL 282 ITAT (Pune)]

Deloittee Consulting India Pvt. Ltd. v. DCIT, [ITA No. 1082/Hyd/2010]

Genisys Integrating System (India)(P.) Ltd. v. DCIT, [53 Sot 159 (Bang)]

Decision applied: CIT v. Agnity India Technologies (P.) Ltd. [(2013) 36 taxmann.com 289 (Delhi)]