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2014 (9) TMI 1010 - AT - Income TaxTransfer pricing adjustment - Held that:- Informed Technologies India Ltd. is required to be excluded from the final set of comparables because the said concern is abnormal profit making company. Maple e-Solutions Ltd the difference in functions sought to be canvassed by the assessee is emerging from record. Merely because the two kind of activities are referred to as ITES in a Notification by the CBDT does not imply that the same have to be understood as functionally identical/similar. Infact, the dissimilarity in the functions performed by assessee and Maple eSolutions Ltd. is quite evident and the same has also not been disputed by the lower authorities. On this aspect, we are of the opinion that the said concern is liable to be excluded from the list of comparables. Disallowance of fee paid to ROC, Pune - CIT(A) disallowed the said expenditure on the ground that the payment was in the nature of penalty and thus the same was not an allowable expenditure in terms of the Explanation below section 37(1) - Held that:- he additional fee/cost to regularize the default in compliance with the filing requirements are specified by the Department of Company Affairs, Government of India and it does not envisage that the payments are penal in nature. In our considered opinion, whether or not a particular payment is in nature of penalty is required to be examined having regard to the particular statutory scheme in terms of which it has been incurred. In the present case, apart from making a bald assertion the income-tax authorities have not established as to how the impugned payment is in the shape of penalty or an amount akin to penalty for any breach or infraction of law or any public policy. In the absence of such a finding based on relevant material we are unable to accept the stand of the Revenue that Explanation to section 37(1) of the Act is attracted qua the impugned payment. Therefore, we set-aside the order of the CIT(A) and direct the Assessing Officer to delete the impugned addition. - Decided in favour of assessee Addition to the stated value of international transaction of IT enabled services rendered by the assessee to its associated enterprise in order to determine its arm's length price - selection of comparables - Held that:- We are inclined to uphold assessee’s plea of excluding Coral Hubs Ltd. from the final set of comparables on account of the distinction in the business model. Genesys International Corporation Ltd. be excluded from the final set of comparables on the ground that for the financial year ended 31.03.2008 corresponding to the year under consideration before us, the said concern has made abnormally high profit of 46.82% for the purposes of determination of arm's length price of international transaction of Provision of IT enabled services to the associated enterprises.
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