Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2014 (6) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2014 (6) TMI 371 - AT - Income TaxTransfer pricing adjustment - International transactions for software development services provided to AE Determination of operating cost Held that:- The cost of development of new product seems to be not on the assessee but on the AE - However, these contentions were neither examined nor commented upon by either of the revenue authorities - in the absence of any clarity on the issue, no finding could be given either to exclude the amount or include the amount as part of operating cost the Revenue itself has excluded the earlier R & D expenditure from the computation of operating cost, assessees contention seems to be genuine, if such expenditure was R & D for development of future products thus, the matter is liable to be remitted back to the TPO for fresh adjudication about the nature of expenditure incurred and why the amount was not categorised as R & D expenditure and whether any product was developed to which this expenditure was capitalized or claimed as relating to in later years also the issue of operating cost is also remitted back to the TPO - Decided in favour of Assessee. Selection of comparables Functionally dissimilar Employee cost filter Held that:- Following Trilogy E-Business Software India (P.) Ltd. Versus Deputy Commissioner of Income-tax. Circle 12(4). Bangalore [2013 (1) TMI 672 - ITAT BANGALORE] - The 14 comparables are required to be excluded by the TPO these Companies are directed to be excluded from the list of comparables as assessee turnover is only 2.18 crores and employee cost is more - Many of the companies are also found to be not functionally similar. The various filters and reasons accepted in other cases do apply to the assessee as TPO selected same 26 comparables in all the cases relied on and decided earlier in various cases - the mean PLI of the rest of the comparables selected by the TPO would come to 18.66% and this is within the margin as arrived at by the assessee after excluding the R&D cost Decided in favour of Assessee.
|