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2021 (7) TMI 319 - AT - Income TaxTP Adjustment - Comparable selection - exclusion of Thirdware from the final set of comparables for the purpose of benchmarking Software Development segment - HELD THAT:- A close examination of decision in the said case reveals that the said company was accepted as comparable to a Software Development service provider on the basis of geographical segment reporting, i.e. domestic vis-à-vis overseas. The issue was not examined with regard to segment reporting of the services and functional analysis - Hon'ble Jurisdictional High Court in the case of PTC Software (I) Pvt. Ltd. [2016 (9) TMI 1282 - BOMBAY HIGH COURT] has held that Software Product and Software Development services are functionally different. The company engaged in selling of software product is incomparable to company rendering Software Development services. Thus, in view of the above, we hold that the decision rendered in the case of Steria (India) Ltd [2018 (4) TMI 578 - DELHI HIGH COURT] is distinguishable, hence, the same does not support the case of Revenue. We hold that Thirdware being a product company is not a good comparable to a company engaged in software development services, therefore, the Assessing Officer is directed to exclude Thirdware from the final set of comparables. Working capital adjustment - HELD THAT:- We find that in assessment year 2010-11 the CIT(A) had allowed working capital adjustment on final set of comparables. The Revenue challenged the same before the Tribunal [2019 (10) TMI 1241 - ITAT MUMBAI]. The Coordinate Bench upheld the finding of CIT(A) in allowing working capital adjustment and rejected the ground raised by the Revenue. Similarly, in assessment year 2011-12 and 2013-14 the Tribunal allowed the benefit of working capital adjustment to the assessee following the order in assessment year 2010-11. No contrary material has been placed before us by the Revenue. Respectfully following the decision of Coordinate Bench in assessee's own case in the preceding assessment years and immediately succeeding assessment year, we direct the Assessing Officer to allow the benefit of working capital adjustment to the assessee. Consequently, ground No. 1.2.10 is allowed. Transfer Pricing (TP) adjustment made on account of provision of IT support and related services - Excel was excluded from list of comparables on account of abnormally fluctuating revenue. Similar view has been taken by the Tribunal in the case of M. Model Global Services [2019 (10) TMI 1439 - ITAT MUMBAI] for exclusion of Excel from the final set of comparables. Respectfully following the decision of Co-ordinate Bench in the case of Banc Tec TPS India Pvt. Ltd. [2020 (7) TMI 367 - ITAT MUMBAI] AO is directed to exclude Excel from the list of comparables for parity of reasons.
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