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2015 (11) TMI 66 - ITAT BANGALORETransfer pricing adjustment - selection of comprabales - Xcel Vision Technologies - Held that:- The learned CIT (Appeals) once he has applied certain filters like salary cost filter of 25%, RPT filter in excess of 0 %, turnover filter, etc., the filters should be consistently applied. Modifying them, as has been done by the learned CIT (Appeals) in the impugned order with respect to the salary cost filter of 25% of revenues, is arbitrary especially when the salary cost to this company is 24.70% of revenues, which is below the filter of 25% applied by the learned CIT (Appeals) himself. In this factual matrix, the salary cost of this company being 24.70% of revenues which is below the filter of 25% applied by the learned CIT (Appeals), we hold and direct that the company, i.e. Xcel Vision be excluded from the list of comparables to the assessee. Cherry Soft Technologies Ltd - CIT (Appeals) applied the on-site revenue filter of 75%. According to the assessee, the company is export oriented and has export turnover in excess of 75% of sales, its foreign currency expenses are less than 50% of sales and therefore the conclusion of the learned CIT (Appeals) to exclude this company by applying the on-site was incorrect. From the record it appears that these submissions/arguments put forth by the assessee have not been examined by the learned CIT (Appeals) and therefore, in the interest of justice and equity, we deem it fit to restore the matter to the file of the learned CIT (Appeals) for examination afresh in the light of the submissions put forth by the assessee and to adjudicate thereon on the comparability of Cherry Soft Technologies Ltd. after affording adequate opportunity to the assessee of being heard and to submit details/submissions in this regard. Working Capital and Risk Adjustment - Held that:- . Keeping in mind the order of the co-ordinate bench of this Tribunal granting the assessee an adhoc 2% adjustment towards working capital and risk differentials, in its order in the assessee's own case for Assessment Year 2003-04, we restore this matter to the file of the Assessing Officer / TPO and direct them to examine and de novo adjudicate on the assessee's claim for grant of working capital and risk adjustment, taking into account the facts of the case for the year under consideration in the light of the Tribunal’s order for Assessment Year 2003-04 M/s. Flextronics Software Systems Ltd.,Infosys Technologies Ltd., L&T Infotech Ltd., Satyam Computer Services Ltd. and iFlex Solutions Ltd. companies having turnover of more than ₹ 200 Crores, should be excluded from the list of comparable companies Geometric Software Solutions Ltd. - his company, having RPT of 16.25% fails the RPT filter of 15% applied and followed by other co-ordinate benches of this Tribunal, is to be excluded from the list of comparables. Even otherwise from the observations of the learned CIT (Appeals) from the Annual Report of this company as laid out in para 16.2 of this order, it is evident from its diversified activities that this company is functionally different and dis-similar from the assessee in the case on hand, who is a mere provider of software development services. Visualsoft Technologies Ltd. - CIT (Appeals), in our view from the facts recorded in the impugned order, has not factually brought out or established that the on-site revenue of this company was in excess of 75% of its revenues. In these circumstances, it cannot be said that the assessee has failed the on-site filter of more than 75% of its on-site revenues being from exports and therefore in our view, in the factual matrix of the case the learned CIT (Appeals) has erroneously excluded this company from the list of comparables when it has passed the on-site filter applied as has been contended by Revenue. We, therefore, restore this company i.e. Visual Soft Technologies Ltd. to the final set of comparable companies to the assessee for computing the ALP of its international transactions.
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