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2021 (3) TMI 928 - ITAT, BANGALORETP Adjustment - comparability of R Systems International Limited - HELD THAT:- R Systems International Ltd. is following the calendar year i.e. 1st Jan. to 31st Dec for maintaining their accounts, whereas the assessee follows 1st Apr. to 31st March, still it could be a comparable to the assessee’s case and be included as a comparable in the list of comparables as decided by the Tribunal in the case of Indecomm Global Services India Pvt. Ltd.[2019 (12) TMI 78 - ITAT BANGALORE]. Accordingly, we remit the matter of comparability of this company to the file of AO/TPO to examine and decide it afresh in the light of the directions contained in the order of Tribunal in Indecomm Global Services India Pvt. Ltd. (supra). This ground of assessee is allowed for statistical purposes. As in the case of Tesco Hindustan Service Centre (P.) Ltd., [2017 (1) TMI 1673 - ITAT BANGALORE] we hold and direct that Accentia Technologies Ltd., be excluded from the list of comparable companies on grounds of functional dissimilarity. Fortune Infotech Ltd has been excluded as a comparable by the coordinate Bench of the Tribunal in the case of Outsource Partners International P. Ltd [2017 (2) TMI 1410 - ITAT BENGALURU]. Jeevan Scientific Technology Ltd is to be excluded from final list. Disallowance under section 40(a)(i) for software expenses - HELD THAT:- We find that that this issue came up for consideration before in the case of Engineering Analysis Centre of Excellence (P.) Ltd. v. CIT, . [2021 (3) TMI 138 - SUPREME COURT] wherein it was held that transaction relating to software are in the nature of sale and not license, no copyright or part of any copyright is licensed to the assessee. The non-resident owner continues to have proprietary rights in the software and use of software by the Indian company is limited to making back-up copy and redistribution. So payment received for sale of computer software is business income. As such, software purchased is in the nature of purchase and sale of product and no TDS is deductible. Being so, it is allowable as expenditure and there is no question of deduction of any TDS. Short credit or Tax Deducted at Source ('TDS') - HELD THAT:- We remit the issue to the AO and direct to give correct TDS credit after examination. MAT credit to be carried forward which is consequential to additions made in the assessment order. Comparability - Companies functionally dissimilar with that of assessee need to be deselected from final list. Compute the mean of working capital adjustment in respect of comparables retained after giving effect to this order of the Tribunal. Deduction u/s 10A computation - HELD THAT:- As decided in Yokogawa India Ltd. [2016 (12) TMI 881 - SUPREME COURT] incomes under other heads and the provisions for set off and carry forward contained in sections 70, 72 and 74 would be premature for application. The deductions under section 10A therefore would be prior to the commencement of the exercise to be undertaken under Chapter VI for arriving at the total income of the assessee from the gross total income. The somewhat discordant use of the expression 'total income of the assessee' in section 10A has already been dealt with earlier and in the overall scenario unfolded by the provisions of section 10A the aforesaid discord can be reconciled by understanding the expression "total income of the assessee" in section 10A as 'total income of the undertaking. Though section 10A, as amended, is a provision for deduction, the stage of deduction would be while computing the gross total income of the eligible undertaking under Chapter IV and' not at the stage of computation of the total income under Chapter VI. Exclude telecommunication expenses from the export turnover while computing the deduction u/s 10A - HELD THAT:- This issue is decided in favour of assessee in view of the DRP following the judgment of the Hon’ble High Court of Karnataka in CIT v. Tata Elxsi Ltd.[2011 (8) TMI 782 - KARNATAKA HIGH COURT] which is confirmed by the Hon’ble Supreme Court in the case of CIT v. HCL Technologies Ltd. [2018 (5) TMI 357 - SUPREME COURT]
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