2018 (4) TMI 1755 - ITAT BANGALORE

TP Adjustment - determination of Arm's Length Price in respect of international transaction of rendering of Software Development Services and Information Technology Enabled Services by the Assessee to its holding company - Comparable selection - HELD THAT:- Assessee is a company engaged in the business of providing contract Software Development Services (SWD Services) and providing Information Technology Enabled Services (ITES) to its holding company in Netherlands BV as a captive service provider. The transaction of rendering software development services and ITES to holding company was a transaction with an Associated Enterprise (AE) and was therefore an international transaction thus companies functionally dissimilar with that of assessee need to be deselected from final list.

Comparability of ITES segment - companies functionally dissimilar with that of assessee need to be deselected from final list.

Grant the entire FTC (Foreign Tax Credit) (i.e., credit for tax paid outside India on income which is also included in die total income in me return of income filed in India) - HELD THAT:- The facts in this regard are that in its return of income filed under the Act for the AY 2012-13, the Assessee for the instant assessment year, Assessee has claimed FTC of ₹ 13,94,950/- (relevant details at pages 867 and 894 of the paperbook). However, in the draft assessment order passed by the AO, he allowed FTC only to the extent of ₹ 9,83,255/- without giving any explanation for the short-grant of FTC. Although the Assessee objected to the same before the DRP, it refused to interfere with this issue on the premise that doing so would be beyond the scope of its powers. Consequently, in the impugned final assessment order, FTC was only allowed to the extent of ₹ 9,83,255/- as against the sum of ₹ 13,94,950/- that was claimed by the. Assessee in its return of income. We are of the view that it would meet the ends of justice if a direction is given to the AO to verify the claim of the Assessee and allow tax credit in accordance with law.