Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2014 (7) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2014 (7) TMI 181 - ITAT HYDERABADTransfer pricing adjustment – Selection of comparables - Accel Transmatic Ltd.- Held that:- The TPO has drawn conclusions on the basis of information obtained by issue of notice u/s.133(6) of the Act - This information which was not available in public domain could not have been used by the TPO, when the same is contrary to the annual report of this company as highlighted by the Assessee in its letter dated 21.06.2010 to the TPO – the company was developing software products and not purely or mainly software development service provider – thus, this company cannot be taken as comparable. Megasoft Ltd. – Infosys Technologies Ltd. - Held that:- The TPO has accepted the fact that the assessee is purely a software development service provider to its AE whereas Infosys is not a captive service provider like assessee - Infosys is engaged in diversified activities and also engaged in development of products consultancy and solution - That apart, the size, reputation and brand value of Infosys, in no way makes it comparable to a small captive service provider like assessee. Though the assessee has advanced detailed submissions for inclusion of the aforesaid companies, but, the DRP has simply brushed aside the same without considering in proper perspective - the assessee’s contention in respect of the companies requires reconsideration - so far as L&T Infotech Ltd. is concerned, this company is having a huge turnover of 790 crores and unlike the assessee it is not captive service provider - Therefore, the reasons for which Infosys Technologies Ltd cannot be treated as comparable to the assessee also equally applies to this company - except L&T Infotech Ltd., the comparability of the other companies selected by the assessee, but, rejected by the TPO is restored back to the file of the AO/TPO for fresh consideration. Exclusion of communication expenses – Held that:- The decision in CIT Vs. Gemplus Jewellery[ 2010 (6) TMI 65 - BOMBAY HIGH COURT] followed – a receipt such as freight and insurance which does not have any element of profit cannot be included in the total turnover - Freight and insurance do not have an element of turnover - these two items would have to be excluded from the total turnover particularly in the absence of a legislative prescription to the contrary – thus, the AO is directed to exclude the communication expenses from export turnover as well as total turnover while computing deduction u/s 10A of the Act – Decided partly in favour of Assessee.
|