Libertatem Magazine

Comparison Among IT Companies Under Section 254 Set Aside by Income Tax Appellate Tribunal

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The present appeal made by the Appellant is about whether the order made by the Tribunal on 30th September 2018 needs any kind of rectification.


The Appellant was not satisfied with the order passed by the Tribunal on 30th September 2018. The Appellant believed that in the order, the learned TPO and the Hon’ble DRP erred in making the judgement.

So, the Appellant filed an appeal against the order under Section 254 of the Income Tax Act 1991.

Arguments Advanced

The Appellant stated that in the order made by the Tribunal on 30th September 2018, the Ld. TPO accepted those companies engaged in ADP P Ltd Hyderabad information technology-enabled services as comparable without accepting that these companies were functionally dissimilar to the Appellant’s company.

The Appellant stated that it would like to exclude MPS Limited company as a comparable for the Appellant’s company. For this, the Appellant used the written submissions sent by him to the Tribunal on 2nd September 2018 in which special arguments were made as to why MPS Limited cannot be comparable. However, the Ld. TPO didn’t pay any heed to the arguments provided in the written submissions.

The Appellant also bought up the order made by the ITAT on 18th December 2020 in which the Appellant had challenged the comparability of MPS Limited. In the order made on 18th December 2020, the Appellant also stated that the ITAT made the statement that all companies whose revenues from IT-enabled services are less than 75% of the total operating revenue were excluded. The revenue of MPS Limited does not match with the statement made by the ITAT.

The Appellant also stated that in the order made on 30th September 2018, the ITAT didn’t provide any direction in comparison with MPS Limited. The Appellant also added that it needs a direction in the comparison made to MPS Limited.

The Assessee stated that since MPS Ltd doesn’t match with the 75% criteria made by the ITAT, the Assessee wanted this comparison to be set aside. The Learned DR was also heard.

Court Observations

The ITAT paid attention to Section 254 of the Income Tax Act 1991. It also considered the statements and filter added by it in the order made on 18th December 2020.


The ITAT believes that there needs to be a correction made in the order dated 30th September 2018. Hence the M.A filed by the Assessee succeeds.

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