Income Tax Appellate Tribunal - Delhi
Fares Daddy Private Limited,Gurgoan vs Dc/Acit, Civic Center on 25 March, 2026
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH, 'I': NEW DELHI
BEFORE SHRI C.N. PRASAD, JUDICIAL MEMBER
AND
SHRI S. RIFAUR RAHMAN, ACCONTANT MEMBER
IT(TP) A 5923/Del/2024
Assessment Year 2021-22
Fares Daddy Private Limited Vs. DC/ACIT, Civic Center
Unit 301-302, 3rd Floor,
Suncity Success tower
Golf Course extension Road
Sector-65, Haryana
Gurgaon
PAN No. AACCF9357N
Appellant Respondent
Appellant Sh. Avinash Gupta, CA
Sh. Ashish Goyal, CA
Respondent Sh. Dharm Veer Singh, CIT DR
Date of Hearing 09.02.2026
Date of Pronouncement 25.03.2026
ORDER
PER C.N. PRASAD, JM,
This appeal is filed by the assessee against final assessment order dated 25.10.2024 passed u/s. 143(3) r.w.s. 144C (13) r.w.s. 144B of the Act pursuant to the directions of the DRP dated 03.09.2024 passed u/s.144C(5) of IT Act for the A.Y. 2021-22.
2. The assessee has raised following grounds of appeal :-
1. The order of the learned Assessing Officer and directions of the Hon'ble DRP are based on incorrect interpretation of law and therefore are bad in law.
2. The DRP order is erroneous in law and facts as no direction has been given in the order in relation to comparable rejected by the Ld. TPO on wrong ground of loss making comparable and the same was objected by the appellant before DRP for the arm's length price determination, resulting in the exclusion of a valid comparable and an incorrect conclusion.
3. The DRP order is erroneous in law and facts as no direction has been given in the order in relation to the exclusion of certain comparable objected before DRP which are failing to meet the legally acceptable criteria for comparability.
4. The Final order of Ld AO and TPO is erroneous in law and facts as the Ld. TPO/AO has failed to provide the working capital adjustments which is in complete violation of the directions by the Hon'ble DRP.
5. The learned AO/TPO erred in wrongly computing the operating margins of some of the comparable companies.
6. Corporate Tax Grounds Ground 6: The Final Order of the Ld. AO order is erroneous in law and facts in not allowing genuine business expenditure of Rs.20,48,075/- as the same has been passed without considering the evidences of various expense incurred by the appellant company for the purpose of business.
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7. The assessee craves leave to add, alter amend or withdraw all or any of the Grounds of Appeal herein and to submit such statements, documents and papers as may be considered necessary either at or before the appeal hearing.
3. The ld. Counsel for the assessee submitted that ground No.1 of grounds of appeal is general. Referring to ground No.2 of grounds of appeal Ld. Counsel submitted that the TPO rejected one of the comparables namely Yatra Online Ltd. on the ground that this company is persistent loss making company. The Ld. Counsel for the assessee submits that Yatra Online Ltd. which the assessee has selected is one of the comparable which is duly rejected by the TPO on the ground that this company has loss in two out of three financial years and therefore, the same cannot be considered as comparable company. The Ld. Counsel submitted that the assessee explained to the Ld. TPO that this company is in losses for Financial Years 2018-19 and 2020-21 but there were profits for the Financial Year 2019-20 and hence this company cannot be said to be a persistent loss making company. It was also explained that this company is not making any extraordinary losses. It was also explained that this company is growing and healthy company and the business of this company is similar to the assessee and due to normal business reasons this company is incurring losses, there is no extraordinary event in the company and therefore this comparable company should not be rejected.
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4. The Ld. Counsel for the assessee further submitted that in order to arrive at a set of due comparable companies it is solely guided by parameters of functional comparability and therefore the assessee has not rejected companies on the basis of margins earned whether profits or losses. The Ld. Counsel for the assessee submitted that it is pertinent to note that persistent losses earned by the company should not at all indicative of the functions performed by the company. The Ld. Counsel for the assessee submits that it is not prudent to eliminate any company from the comparable set unless there is dissimilarity of functions. Therefore, it is submitted that rejection of the companies on the basis of persistent losses rather than functional or asset profile, would not meet the comparability standard required in application of TNMM method which was selected by the assessee as the most appropriate method for benchmarking. The Ld. Counsel further submitted that considering a company with persistent loss, there should be continuous loss for two or more years which is not the case here in the case of Yatra Online Ltd. The Ld. Counsel for the assessee relied on the following decisions in support of the above contentions :-
1. Nortel Networks India (P) Ltd. Vs. Add. CIT 36 taxmann.com 439
2. Sony India (P) Ltd. v. DCIT 114 ITD 448 Delhi
3. Quark Systems Pvt. Ltd.
5. On the other hand the Ld. DR submitted that even though the comparable company Yatra Online Ltd. was having losses Page | 4 into two financial years and profit in one financial year in between the same is persistent loss making company and it should be excluded from comparability analysis for the reason the said company is nothing but persistent loss making company. Reliance was placed on the decision of the Delhi Tribunal in Navisite India Pvt. Ltd. Vs. ITO in ITA No.5329/Del/2012 dated 31.05.2013 and the decision of the Mumbai Bench in the case of Advance Power Display Systems Ltd. Vs. ACIT reported in 146 ITD 761.
6. Heard rival submissions and perused the orders of the authorities below. On perusal of the order of the TPO it is observed at page-5 that the TPO rejected the assessee's comparable namely Yatra Online Ltd. as not suitable comparable on the ground that this company failed persistent loss filter and hence rejected as suitable comparable. It is not in dispute that this company i.e. Yatra Online Ltd. incurred losses during the Financial Years 2018-19 and 2020-21 and earned profits during the Financial Year 2019-20. This comparable company did not incur any losses consecutively for two financial years. Therefore, in our view this company cannot be considered as a persistent loss making company for rejecting from the final set of comparables when it is functional comparable company. The case laws relied on by the Ld. DR has no application to the facts of the case of the assessee since the decision relied on in the case of Navisite India Pvt. Ltd. Vs. ITO, the facts are that comparable company selected by the assessee which was rejected was having losses for the consecutively for three or more years which is not the case in Page | 5 the hand before us. Similarly the decision of Mumbai Bench in the case of Advance Power Supply Display System Ltd. (supra) also not applicable to the facts of the assesee's case since one of the comparable was reported persistent loss from year after year which is not a case before us. Thus, we hold that AO/TPO is not justified in rejecting Yatra Online Ltd. as not suitable comparable for the reason that the said company incurred losses during the financial years 2018-19 and 2020- 21 ignoring that this company had earned profits in F.Y.2019- 20 and therefore is not persistent loss company.
7. Thus, we direct the AO / TPO to include Yatra Online Ltd. as suitable comparable for benchmarking the transactions. Ground NO.2 is allowed.
8. Coming to ground No.3 the Ld. Counsel for the assessee submitted that the same is not pressed. In view of the submissions of the Ld. Counsel for the assessee, ground No.3 is dismissed as not pressed.
9. Ground No.4 which is in respect of working capital adjustment, the Ld. Counsel for the assessee submitted that DRP had directed the TPO/ AO to compute working capital adjustment at page -8 pra 4.1.14 of the directions. The Ld. Counsel for the assessee submitted that the assessee furnished details before the AO but the AO/ TPO failed to grant working capital adjustment. Therefore, the Ld. Counsel for the assessee submitted that directions may be given to the TPO for granting working capital adjustment.
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10. On hearing both the sides and going through the order of the DRP we observed that specific directions were given to the TPO to compute working capital adjustment in accordance with the OECD guidelines. It is the contention of the Ld. Counsel for the assessee that the assessee had furnished all the details. Thus, considering the directions of the DRP and the submissions of the Ld. Counsel for the assessee we direct the Ld. AO/ TPO to grant working capital adjustment to the assessee as directed by the DRP for which the details were already furnished by the assesse. If the AO/TPO requires any further details the same may be summoned from the assessee before passing the order giving effect to the Tribunal's order. This ground is allowed for statistical purpose.
11. Coming to ground No.5 the Ld. Counsel for the assessee submitted that the TPO while passing the order did not allow corrections for operating margins of some of the comparable companies. In other words the AO/ TPO wrongly computed the operating margins of some of the comparable companies and therefore, a direction may be given to the AO/ TPO to correct the margins of the comparable companies.
12. The Ld. DR has no serious objection.
13. In view of the submissions of the rival parties the AO/ TPO is directed to looking into the contentions of the assessee and pass appropriate orders. The ground No.5 of grounds of appeal is allowed for statistical purpose.
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14. Coming to ground No.6 of grounds of appeal the Ld. Counsel for the assessee submits that the AO disallowed business expenditure i.e. credit card expenses even though the assessee had furnished all the details. The Ld. Counsel for the assessee submits that the said expenditure pertains only to the website charge which is incurred for purpose of business and therefore the same is allowable expenditure. The Ld. Counsel seeks direction to the AO to examine this issue in the light of the details/ submissions furnished before him.
15. The Ld. DR has no serious objections.
16. After considering the rival submissions the AO is directed to look into the submissions of the assessee and the details furnished therein and pass appropriate order in accordance with law.
17. In the result, the appeal of the assessee is partly allowed as indicated above.
Order pronounced in the open court on 25.03.2026.
SD/- SD/-
[S. RIFAUR RAHMAN] [C.N. PRASAD]
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated: 25.03.2026
*Neha, Sr.PS
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Copy forwarded to:
1. Appellant
2. Respondent
3. PCIT
4. CIT(A)
5. DR
Asst. Registrar,
ITAT, New Delhi
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