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2014 (9) TMI 309 - AT - Income TaxTransfer pricing adjustment – Selection of comparables – Exensys Software Solutions Ltd. – Extraordinary event in the company because of merger - Held that:- 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 amalgamation of Holool India Ltd. - Assessee company has got benefit by advanced latest technical expertise on various technology domains of the transferor company - This was clearly stated in Notes that claim was with reference to the AS-14 and also due to amalgamation of two companies - out of gross assets, Brands alone consist of ₹ 5 crores, therefore, intangible assets comprising of substantial part of this company's assets - 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 vide letter dated 26-04-2007 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 - the case of Exensys Software Solutions Ltd. cannot be taken as comparable - the other cases, Third ware Solutions Ltd., Infosys, Sankhya Infotech Ltd., etc, are also to be excluded - The AO is directed to exclude the comparable and re-work out the arm's length margin – Decided in favour of assessee. Matter pending before AO u/s 154 - Exclusion of export turnover – Computation of deduction u/s 10A – Held that:- There is no need for adjudication of this ground when the matter is pending before the AO u/s 154 - AO is directed to examine the issue and consider necessary relief to Assessee regarding the amounts received within 12 months as per the directions of RBI vide its General Circular dated 01-11-2004 issue – Decided in favour of assessee.
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