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2014 (2) TMI 838 - ITAT HYDERABADTransfer pricing adjustments - Classification of assessee company - Whether the assessee was one of ITES company only when the assessee is both in the activities of IT as well as ITES – Held that:- The assessee has been categorised as ITES Company - According to the TPO, companies within the category of data processing services come within the back office operation as per the CBDT Circular No. SO 890 (E) dated 26-9-2000 - the overall business of the assessee is ITES - This view of the TPO was also upheld by the DRP - the matter is required to be considered afresh by the TPO – thus, the matter remitted back to the TPO for fresh adjudication – Decided in favour of Assessee. Selection of comparables – Held that:- Since the issue relating to classification of the assessee remitted back to the TPO and since the final classification of the assessee IT and ITES company or only ITES Company, would have an impact on the selection of comparables – thus, this matter also remitted back to the TPO for adjudication. Claim of pre-operating expenses as part of operating cost – Held that:- The assessee's claim cannot be accepted as the facts and materials on record shows that the assessee was incorporated as a company on 17-1-2007, it has been clearly mentioned that the assessee company has commenced its operations from 1st April, 2007 and hence when the assessee company has commenced its operations from 1st April, 2007, the assessee's claim of prior period expenses for the period subsequent to the commencement of operation cannot be accepted. We therefore dismiss the grounds raised by the assessee. Computation of deduction u/s 10A of the Act – Exclusion of communication charges – Held that:- The decision in CIT v. Gem plus Jewellery India Ltd. [2010 (6) TMI 65 - BOMBAY HIGH COURT ] followed – thus, the AO is directed to re- compute the deduction claimed u/s 10A of the Act after reducing communication charges both from the export turnover as well as total turnover – Decided in favour of Assessee.
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