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2016 (8) TMI 1160 - AT - Income TaxTPA - selection of comparable - Held that:- E Infochips Bangalore Ltd. - as when the segmental data is not available, we cannot keep the company as comparable. Kals Information Systems Ltd. company is to be omitted from the list of comparable companies as this company was developing software products and not purely or mainly software development service provider. Tata Elxsi Ltd. (Seg.) be omitted from the list of comparable companies as it operates in the segments of software development services which comprises of embedded product design services, industrial design and engineering services and visual computing labs and system integration services segment. There is no sub-services break up/information provided in the annual report or the databases based on which the margin from software services activity only could be computed. Amounts received after the credit period - Charge of interest - DRP given partial relief by directing TPO to adopt LIBOR + 250 bps instead of 12% - Held that:- It is a fact that the assessee is a captive developer, functions on the directions of AE and depends on AE on functionally and financially. The business runs on the mutual agreement. Unless there is mutual agreement on the terms of payment or any bench mark available in the industry, which can be considered. Revenue authorities cannot presume unless there is any written agreement or agreed terms in the industry or any comparables available on the record. We find that the assessee has allowed the credit period of 79 days which is much below the industry average of 112 days as submitted by the ld. AR. The same was not disputed by the ld. DR. In our considered view, the credit period extended by the assessee to its AE is reasonable particularly when there is no bench mark available. Accordingly, this ground is allowed.
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