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2014 (3) TMI 171 - AT - Income TaxSelection of comparables - Exensys Software Solutions Ltd. – Four Soft Ltd, Infosys,., Sankhya Infotech Ltd., Thirdware Solutions Ltd, Tata Elexi (seg) - Held that:- There is a merit in assessee’s contentions about noncomparability of various comparable companies selected by the TPO - There is a merger of Holool India Ltd. and in the director’s report - there is a clear mention that the company’s income is possible with the amalgamqation of Holool India Ltd. - Assessee company has got benefit by advanced latest technical expertise on various technology domains of the transferor company - claim was with reference to the AS-14 and also due to amalgamation of two companies - Not only in the correspondence with the TPO that Assessee expressed its inability to furnish separate accounts for two amalgamated companies but also further it has clearly mentioned to the TPO that there is a gap in the expenditure expected to incur and actual expenditure incurred which made the company record high operating margin on cost. These factors indeed support assessee’s contention that this exceptional profit with the fact of amalgamation effected operating profit of the company and this cannot be taken as comparable - Relying upon Intoto Software India (P.) Ltd. Versus Assistant Commissioner of Income-tax, Circle -2(1), Hyderabad [2013 (10) TMI 599 - ITAT HYDERABAD] - There is an extra-ordinary event which resulted in high operating margin of that company – thus, the AO is directed to exclude these companies from the list of comparables - Decided in favour of Assessee.
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