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2015 (5) TMI 148 - AT - Income TaxTransfer Pricing adjustment - whether international transaction of provision of software development services of the Appellant does not satisfy the aim's length principle envisaged under the Income-tax Act, 1961? - selection of comparable - Held that:- It quite clear that the activities on account of the Infrastructure Management Services and E-learning and Digital Consulting which constitute 17% and 35% respectively of the total revenue are obviously IT enabled services and are not akin to the software design and development services being rendered by the assessee. On similar considerations, the said concern was found to be incomparable to assessee's segment of Provision of software design and development services in the immediately preceding assessment year 2008-09 (supra) by the Tribunal. Following the aforesaid precedent, which continues to hold the field, in this year also on account of similarity in circumstances, we therefore uphold assessee's plea for exclusion of FCS Software Solutions Ltd. from the final set of comparables. KALS Information Systems Ltd.(Application Software Segment) be excluded from the final set of comparables as the said company was developing software products and was not purely/ mainly a software development service provider. E-infochips Ltd.cannot be excluded from the final set of comparables on the ground that the instant assessment year is an "exceptional year of business". It would not be appropriate to compare each and every single item of income and expense in the financial statements in order to measure its comparability. Moreover, we find that for assessment year 2010-11 also, the said concern has been found to a good comparable by the DRP in terms of order dated 29.12.2014. Thus the said concern is liable to be included in the final set of comparables. Persistent Systems Ltd., IT Services Segment of Mindtree Ltd.and Larsen and Toubro Infotech Ltd., the order of the TPO as well as the show-cause notice issued by him in the course of Transfer Pricing proceedings show that no opportunity was allowed to the assessee before applying the turnover filter - we therefore remand the matter back to the file of the Assessing Officer/TPO for consideration afresh. Sasken Communications Technologies Ltd. n the application of the turnover filter, we have already set-aside the matter back to the file of the TPO while considering the Ground of Appeal No.4.6 of the assessee in the earlier paras. Therefore, the aforesaid aspect of the matter shall be re-visited by the TPO/Assessing Officer in the light of our decision in Ground of Appeal No.4.6. RS Software India Ltd. exclusion from the final set of comparables is liable to be affirmed. Akshay Software Technologies Ltd., Thinksoft Global Services Ltd.and Zylog Systems Limited be excluded from the final set of comparables on the ground that the said concerns were predominantly engaged in providing onsite services whereas assessee was providing services to his clients as an offsite service provider. Helios and Matheson Ltd. the financial data available in public domain does not conform to the financial year in which the international transactions in question have been carried out by the assessee. Therefore, the TPO justifiably excluded the said concern from the final set of comparables, which we hereby affirm. Bodhtree Consulting Ltd. margins of the said concern for the year under consideration does not reflect a normal business trend and therefore the inclusion of the said concern in the final set of comparables would not lend credibility to the comparability analysis. - Thus directing the Assessing Officer/TPO to re- compute the arm's length price of the international transactions - Decided partly in favour of assessee.
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