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2013 (9) TMI 189 - AT - Income TaxTransfer pricing adjustments - ALP - selection of comparables - ‘Turnover filter’ to be used as a guidelines for selection of companies as comparables in Transfer Pricing – Reliance has been placed upon the judgment in the case of Genisys Integrating Systems (India) (P.) Ltd.[ 2011 (8) TMI 952 - ITAT BANGALORE], wherein it has been held that, for the purpose of classification of companies on the basis of net sales or turnover and also taking into consideration the Indian scenario, the classification made by Dun & Bradstreet is more suitable and reasonable. - Held that:- As per the ratio laid down by the Tribunal, comparables of companies having turnover of less than Rs.2000 crores and above Rs.200 crores only need to be considered – In the instant case, decided accordingly. Depreciation adjustment in computation of Arm’s length price in the Transfer Pricing Transactions – Held that:- Relying upon the judgment in the case of 24/7 Customer.Com Pvt. Ltd., in [2013 (1) TMI 45 - ITAT BANGALORE], it has been held in the instant case that benefit of depreciation adjustment be given to the assessee as per the chart filed by the assessee which works out to around 3.39% - Thus, after the depreciation adjustment of 3.39%, from 16.56% (105% of 15.77% the ALP will come to 13.17%. Apart from this, the Assessing Officer shall give effect to the proviso to sub-section (2) of Section 92C, as per the latest amended Act, as regards 5% range – Decided in favor of Assessee. Computation of deduction u/s 10A of the Income Tax Act – Held that:- If what is excluded in computing the export turnover is included while arriving at the total turnover is included while arriving at the total turnover, when the export turnover is a component of total turnover, such an interpretation would run counter to the legislative intent and impermissible. If that were the intention of the legislature, they would have expressly stated so. If they have not chosen to expressly define what the total turnover means, then, when the total turnover includes export turnover, the meaning assigned by the legislature to the export turnover is to be respected and given effect to, while interpreting the total turnover which is inclusive of the export turnover – In the instant case, the issue has been decided in favor of assessee. Purchase of software, a capital or revenue expenditure - AO has capitalized software expenses debited to the P&L account amounting to Rs 3.8 crores incurred towards purchase of software (out of the total of Rs 7.7 crores), on the basis that since the depreciation table specifies 'computer software' as a separate category, expenses incurred on purchase of software would need to be capitalized and depreciation be claimed – Held that:- Restored the issue back to the file of the Assessing Officer to reappraise the expenditure in respect of Rs.10 lakhs and above and decide the issue in accordance with the decisions of the Delhi Special Bench in Amway India Enterprises [2008 (2) TMI 454 - ITAT DELHI-C].
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