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2022 (6) TMI 1368 - ITAT BANGALORETP Adjustment - adjustments towards the difference in the working capital between the assessee and the companies selected as comparables - HELD THAT:- This issue was considered by the Tribunal in the case of Huawei Technologies India P. Ltd. [2018 (10) TMI 1796 - ITAT BANGALORE], thus we remit the issue to the file of AO/TPO to compute the working capital adjustment after necessary examination in the light of the above observation and after allowing an opportunity of hearing to the assessee. This ground is partly allowed for statistical purpose. Comparable selection - exclusion of M/s. Tata Elxsi Limited from the list of comparables - In the present case, the TPO considered the software development & services segment of Tata Elxsi Ltd. to compare with the assessee company, wherein he found that, that company is functionally comparable to the assessee company and passes through all the filters adopted by the TPO. It was also noted by TPO that revenue streams from this segment is on account of rendition of services and not on account of product sales. As per the information in annual report, in the software development & services segment, this company helps its customer to create new path and experience to drive their growth and also the TPO/DRP rightly commented on the various objections made by the assessee before them. The Ld. A.R. was not able to controvert the above findings before us. In view of this, we do not find any infirmity in including this comparable in the list of comparables. This ground of appeal of the assessee is rejected. Exclusion of Mind Tree Ltd. from the list of comparables - Admittedly, this comparable is considered as not comparable in the case of Yahoo Software Development India Pvt. Ltd. [2020 (2) TMI 1365 - ITAT BANGALORE].Thus we are inclined to direct the TPO/AO to exclude this company from the list of comparables. Exclusion of Larsen & Toubro Infotech Ltd. - We have heard the rival submissions and perused the materials available on record. This company as not considered as comparable in the case of Global Logic India Ltd [2020 (6) TMI 712 - ITAT DELHI] because of trading in software and owned significant intangible assets, thus we direct the AO/TPO to exclude this company from the list of comparables. Exclusion of R.S. Software (India) Ltd. - As rightly pointed out by Ld. A.R., this company is not comparable with the assessee company as held by Tribunal in the case of Yahoo Software Development India Pvt. Ltd. Cited [2020 (2) TMI 1365 - ITAT BANGALORE] wherein the overseas staff and office expenses constitutes significant portion of operating cost of the company i.e. 68.82% which is very exorbitant and hence we are inclined to direct the AO to exclude this company from the list of comparables. Exclusion of Persistent Systems Ltd - This company is considered as not comparable in the case of Yahoo Software Development India Ltd. cited [2020 (2) TMI 1365 - ITAT BANGALORE] wherein it is held that when the controlled transactions of Persistent Systems Ltd. constitutes at 32% of sales, as such it cannot be comparable to the assessee’s case. Further, same view has been taken by Tribunal in the case of Goldman Sachs Services Ltd. [2020 (11) TMI 464 - ITAT BANGALORE] In view of the above, we remit this issue to the file of AO to consider the comparability of the company in the light of above observation of the Tribunal. The issue is remitted back to the AO/TPO for fresh consideration. Exclusion of Nihilent Technologies Ltd. - In view of the high percentage of on site revenue compared to the assessee company, Nihilent Technologies Ltd. cannot be compared to the assessee and cannot be considered as a comparable. However, these facts were not verified or the assessee not raised these arguments before lower authorities. Hence, this issue is remitted back to the file of AO/TPO for fresh consideration to examine this issue afresh. Aspire Systems (India) (P) Ltd. for exclusion - A.R. placed reliance on the order of Yahoo Software Development India Pvt. Ltd. [2020 (2) TMI 1365 - ITAT BANGALORE] for the proposition that on site revenue is very high to the total sales and to be excluded. However, we find that these facts are not examined by AO/TPO at their end. Hence, it is remitted to the file of AO/TPO for fresh consideration after giving opportunity of hearing to the assessee. Exclusion of Infosys Ltd.cannot be compared with that of the assessee basically because of its business model, presence of onsite revenue. Inclusion of I2T2 India Pvt. Ltd. - We direct the AO/TPO to include this company as comparable in the list of comparables. Direction to AO/TPO to include comparables in the list of comparables while passing giving effect order to the DRP’s direction arbitrarily when the above comparable did not form part of the final list of comparables as per TPO order for SWD segment - Bhilwara Infotechnology Ltd., Nucleus Software Expots Ltd., Cybercom Datamatics Information Solotions Ltd. AND Consilient Technologies Pvt. Ltd. - After hearing both the parties, we direct the AO/TPO to pass the consequent orders in conformity with the direction to the Ld. DRP order. Ordered accordingly. Excluding Infomile Technologies Ltd.- Admittedly, the assessee raised additional ground on this issue. As such in our opinion, lower authority have no occasion to examine it. Being so, in the interest of justice, we remit this issue to AO/TPO for fresh consideration.
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