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2013 (7) TMI 843 - AT - Income TaxTransfer pricing adjustment - adjustment in the arm's length price of the international transactions related to contract - IT-enabled service contract software developments services entered into by the appellant with its associated enterprises - TPO conducted a fresh economic analysis for determination of ALP - selection of comparable - Software Services Segment - Held that:- As assessee has objected to the inclusion of Infosys and WIPRO on account of huge difference in size and turnover and functional difference. As there are tribunal decisions both in favour of the proposition as well as against the proposition that huge difference in turnover affects comparability. Now it has come to notice that a Special Bench has been constituted to consider the impact of turnover on comparability, thus when the Special Bench is seized with the matter, it would not be appropriate for us to adjudicate this issue. Hence, remit the issue of inclusion of these comparables to the files of TPO to consider the same afresh, after the decision of Special Bench is available. IT ENABLED SERVICES - Accentia Technologies Limited (ATL) - Held that:- Agreeing with the contention that companies with extraordinary events such as merger and amalgamation should be rejected, if because of merger, de-merger the company becomes functionally different. However, as held in Wills Processing (2013 (3) TMI 415 - ITAT MUMBAI) if the merger of the two functionally similar companies took place, the event of merger itself cannot be taken as a factor for exclusion of the said comparable. Accordingly direct the AO /TPO to verify this fact and accordingly decide the comparability of this company namely Accentia Technologies Ltd. (ATL). Acropetal Technologies Limited & eClerx Services Ltd. - Held that:- As per the Notification of CBDT dated 26.9.2000 the various products and services are notified in the category of IT enabled products and services engineering and design services are very much included in the said list. These services are in the nature of ITES. Thus, no cogency in the assessee's submissions that these companies KPO Services are distinct from BPO services and not comparable. Hence inclusion of these two comparables confirmed. Genesys International Limited - Held that:- Geographical Information System are very much included in the CBDT Circular NO. SO 890(E) dated 26.9.2000 which has given a detailed list of product and services which could be claimed under ITES for the purpose of Section 10A and 10B. The assesses argument that CBDT Notification as mentioned above should be considered only for the purpose of determining eligibility for tax exemption is not acceptable.TPO was correct in adding this as a comparable. Vishal Information Information Technologies Ltd. Now Known as Coral Coral Hub Limited. - Held that:- Outsourcing of routine non-discretionary functions, call centre, data entry, claim processing etc. to other parties is very common feature of ITeS industry. There is no dispute that the assessee derives its entire revenue from ITeS industry. The financial results shows that the company earns income from single revenue stream of IT Enables services. Thus inclusion of this comparable confirmed. HCL COMNET SYSTEMS & SERVICES LTD - Held that:- Assessee's grievance regarding the inclusion of the above comparable is that it had a related party transactions in excess of 25% which is a filter which has been applied by the assessee and accepted by the TPO and DRP. Assessee could not take this plea earlier. But now based on information currently available, assessee has pleaded that the Company be excluded the concerned filter in this case has already been accepted by the Revenue remit this issue to the file of the TPO. The TPO shall examine if the Company is having related party transaction in excess of 25%, if the same is found to be true, the Company would be liable to be excluded. Assessee's appeal is partly allowed for statistical purposes.
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