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2015 (6) TMI 288 - AT - Income TaxTransfer pricing adjustment - selection of comparables by TPO - Held that:- Bodhtree Consulting Ltd.is not being considered as a comparable company in the case of companies rendering software development services. Comp-U-Learn Tech India Ltd. as relying on case of Kenexa Technologies P. Ltd., vs. DCIT [[2014 (11) TMI 587 - ITAT HYDERABAD] restore analysis of this company to the file of TPO who should look into the financial statements of the company and re-examine whether the company can be considered as a comparable company. Assessee should be given due opportunity to submit relevant details to substantiate its claim. With these directions, analysis of this company is restored to the file of TPO. I-Gate Global Solutions Ltd. company itself classified that ITES company, being similar to assessee company, assessee’s objection is that the information obtained by the TPO was not provided to the assessee. In view of this, we, in the interest of justice restore the matter to the file of the A.O. to examine afresh. The segmental information pertaining to ITES obtained by the TPO should be provided to the assessee for its objections and then re-consider the issue whether the same is comparable or not. Infosys Technologies Ltd. excluded from the list of comparable companies as it is functionally dis-similar and different from the assessee ince it owns significant intangible and has huge revenues from software products. It is also seen that the break up of revenue from software services and software products is not available. In this view of the matter, we hold that this company ought to be omitted from the set of comparable companies. Kals Information Systems (Segmental) should not be regarded as a comparable as this company was developing software products and not purely or mainly software development service provider. Tata Elxsi Ltd., (Segmental) should not be regarded as a comparable as unctionally different from that of the assessee Risk analysis - Held that:- Following the decision in the case of Kenexa Technologies P. Ltd., vs. DCIT, Hyderabad [2014 (11) TMI 587 - ITAT HYDERABAD] We remit the issue to the TPO to consider the risk profile of the assessee. We direct the TPO to allow necessary deductions for risk adjustment, after finalising the list of comparables as directed by us Negative working capital - Held that:- There is no need for making any negative working capital adjustment when assessee does not carry any working capital risk. In fact, TPO should have done necessary working capital adjustment to the profits of the selected comparables so as to make them comparable to the assessee. In view of this, we direct the TPO not to make negative working capital adjustment.
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