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2017 (4) TMI 1574 - ITAT BENGALURUTP Adjustment - Provision of SWD services segment - comparable selection - related party transactions - RPT filter - HELD THAT:- We direct exclusion of Celestial Labs Ltd, E-Zest Solutions Ltd, Infosys Technologies Ltd, Kals Information Systems Ltde (seg), Lucid Software Ltd, Wipro Ltd (seg), Accel Transmatic Ltd (seg), Avani Cimcon Technologies Ltd, Flextronics Software Systems Ltd (seg), Helios & Matheson Information Technology Ltd, Ishir Infotech Ltd, Persistent Systems Ltd, Sasken Communication Technologies Ltd (Seg), Tata Elxsi Ltd (seg) , Thirdware Solutions Ltd and Quintegra Solutions Ltd as they are functionally different from the assessee. Megasoft Solutions Ltd is concerned, we direct the AO / TPO to rework its segmental results and consider its comparability only with regard to the software development services segment. The Assessing Officer/TPO is also directed to exclude after due verification those comparables from the list with related party transactions or controlled transactions in excess of 15% of total revenues. Segment of receipts for ITE services - This Tribunal in the case of Pole to Win India P. Ltd [2016 (6) TMI 1296 - ITAT BANGALORE] has examined and excluded the comparables Bodhtree Consultancy Ltd, e-clerx Services Ltd, Infosys Ltd, Mold-tek Technology Ltd. (Seg.) , Vishal Information Technology Ltd and Wipro Limited . Found that the comparables , Apollo Health Street Ltd, Asit C Mehta Financial Services Ltd, M/s. HCL Comnet Systems & Services Ltd and Informed Technologies India Ltd exceeded RPT at 15% and hence directed to excluded them. Set aside the issues in connection with comparables I-services India Pvt. Ltd, Accentia Technology Ltd. and Accurate Data Convertors Pvt. Ltd to the A.O/TPO with a direction to re-examine them in the light of their observations /directions, supra. Following the above decision, the assessee’s plea is allowed in respect of the above 6+4 comparables on functional dissimilarity + RPT exceeding 15%. The issues in connection with the last 3 comparables are set aside for re-examination on the similar lines in which this Tribunal directed in the above case. Disallowance of deduction claimed u/s 10A of the profits of business of UB Plaza Unit in BANGALORE - HELD THAT:- We have considered the rival submissions and find merit in the assessee’s plea. Deduction u/s 10A cannot be denied to the UB Plaza Unit, which is otherwise undisputedly an eligible unit, merely on the ground that it was acquired via a slump sale. Deduction u/s 10A is undertaking / unit specific and that, therefore, an undertaking otherwise eligible for deduction u/s 10A cannot be denied only because its owner has changed . The AO has rightly allowed the deduction in the earlier year. The AO is directed to allow the deduction for the balance period of eligibility. Re-computation of deduction claimed u/s 10A by reduction of telecommunication charges and travel expenses in foreign currency only from export turnover - HELD THAT:- We heard the rival submissions. The assessee’s plea is supported by the binding decision in CIT v. Tata Elxsi Ltd. [2011 (8) TMI 782 - KARNATAKA HIGH COURT] - Hence, consistent with the above decision, the AO is directed to exclude the above expenditure both from ETO and TTO. The assessee’s appeal in this regard is allowed. Re-computation of deduction allowable u/s 10A by the reapportionment of certain expenses between its UB P la za Unit & its Pinnacle Unit -AO held that the deduction u/s 10 should also be further recomputed by the re-apportionment of certain expenses between the aforesaid UB Plaza Unit and its Pinnacle Unit, being the unit ineligible for deduction u/s 10A with effect from AY 2007-08, on the ground that the appellant’s basis of apportionment was erroneous - HELD THAT:- The assessee claimed legal, professional charges, staff recruitment expenses and management fees and apportioned them between Pinnacle and UB plaza units based on the head count. The AO examined and found that the management fees has been debited against Pinnacle Unit alone and the assessee could not explain why this expenditure is not apportioned at all as per it’s own method. On examination, the AO held that the head count is not a fair basis for apportionment. Since the turnover indicated activity level, he apportioned them on the basis of turnover which resulted in increased income of the Pinnacle Unit and reduction of income of UB plaza Unit. The DR submitted that the assessee has to establish its claim before the AO . We are of the view that this issue requires minutest examination and verification of facts, vis a vis units and hence remit the issue to the AO/TPO. The AO/TPO shall give due opportunity to the assessee and decide the issues in accordance with law. Disallowance of claim for set -off of unabsorbed Depreciation - HELD THAT:- From the orders, it is seen that the AO denied the set-off of the above unabsorbed depreciation on the ground that the Pinnacle Unit was a profit making unit in all years prior to a y 2007-08 and that, therefore, the above unabsorbed depreciation is deemed to have been setoff in such years of profit before computing the deduction under Section 10A for those years. Further, the A O has also denied the claim for set-off contending that the same was allowed in the assessment order for AY 2006-07. In the absence of the corresponding facts and figures, it is apparent that AO has decided this issue on surmise. Hence, this issue is remitted to the AO for re-examination and due decision in accordance with the Hon’ble Supreme Court decision in CIT v. Yokogawa India Ltd [2016 (12) TMI 881 - SUPREME COURT] Assessee’s appeal is allowed/ treated as allowed for statistical purpose.
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