2015 (5) TMI 349 - ITAT DELHI

Transfer pricing adjustment - choice of certain comparables in respect of `Software development segment’ - Held that:- Infosys Technologies Ltd. in view the huge turnover, economies of scale, brand value and other factors pointed out by ld. counsel in his submissions and also keeping in view the decision of Hon’ble Delhi High Court in the case of Aginity India Technologies Pvt. Ltd. [2010 (11) TMI 852 - ITAT DELHI] & (2013 (7) TMI 696 - DELHI HIGH COURT) cannot be included in the list of comparables.

Wipro Ltd. (Seg.) be treated as incomparable as this company is also operating as a full-fledged risk taking entity; engaged in providing technology infrastructure services, testing services, package implementation having more than 82,000 employees. It has its own R&D centre. It incurred around 11% of net sales as expenditure on research and development. None of the above factors match with the assessee company. Also there was a merger of Wipro Infrastructure Engineering Ltd., Wipro Healthcare IT Ltd., Quantech Global Services Ltd., with this company during the year in question.

Exclusion of certain companies from the list of comparables in the ‘Marketing support services’ segment - Held that:- Choksi Laboratories Ltd.is basically engaged in providing testing services for various products and also offers services in the field of pollution control. As against this, the services provided by the assessee are purely in the nature of identifying customers for its AEs and providing technical support services to their customers. We fail to appreciate as to how marketing support services can be equated with testing services. When we peruse Schedule of fixed assets of this company, it can be seen that the major asset is ‘Instruments.’ It is with the help of these instruments that the company is providing services in the nature of testing of various products. By no standard, this company can be considered as comparable with the assessee.

WAPCOS Ltd. (Seg.) is not comparable as this company has maintained accounts on entity level and there is no bifurcation available in respect of the services similar to those provided by the assessee under this segment, this company on entity level cannot be considered as comparable.

Recruitment and training expenses - CIT(A) deleted addition - Held that:- The view taken by the ld. CIT(A) that the training expenses are to be allowed as revenue expenses is acceptable - Decided against revenue.

Addition on account of Sundry balances written off - CIT(A) deleted addition - Held that:- The ld. AR fairly admitted that the ld. CIT(A) partly deleted the addition by considering additional evidence which was not there before the AO. Under such circumstances, we do not propose to examine the merits of the addition, which has been deleted in violation of rule 46A of the Income-tax Rules, 1962. Accordingly, the impugned order on this issue is set aside and the matter is sent to the file of AO for deciding it afresh as per law, after allowing a reasonable opportunity of being heard to the assessee. - Decided in favour of revenue for statistical purposes.