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2014 (12) TMI 386 - AT - Income TaxDenial of exemption u/s 10A in respect of Gurgaon and Chennai units Held that:- As decided by the HC in the earlier assessment year, it has been held that CIT(A) was of the view that the assessee had not started commercial production in the year ending 3l.03.2005, but, the AO had also observed that the assessee has started production even prior to 15.03.2005, when the STPI approved the proposal - the Tribunal has recorded finding of fact that the assessee had made and issued invoices on 31.03.2005 - the assessee satisfied the requirement of commencement of production stipulated in Section l0A - assessee could not place on record the copy of the letter written by them, informing STPI about commencement of production, but, there was evidence in the form of reports for the months of January, February and April, 2006, which were examined and referred by the Tribunal - the Tribunal has rightly observed that intimation to STPI was a mere ministerial requirement and not a precondition for registration, which was granted earlier - no benefit or advantage was obtained by the assessee by wrongly claiming and raising the invoices on 31.03.2005 - even if they had raised the invoices in the next financial year, benefit of Section 10A would have been available on the invoice amount - It is accepted that benefit of Section 10A was granted in the AO in the next assessment year decided in favour of assessee. Transfer pricing adjustment Determination of ALP Application of upper filter - Held that:- Assessee rightly contended that with regard to the application of upper filter up to ₹ 200 crores as the assessee was a midsized company having a turnover of ₹ 23 crores only - The comparison of a small assessee with giant sized companies having huge turnover will definitely not serve the purpose of selecting appropriate comparables relying upon CIT Versus Agnity India Technologies Pvt. Ltd. [2013 (7) TMI 696 - DELHI HIGH COURT] thus, the AO is directed to re-adjudicate the issue of arms length pricing and determine the same by excluding the comparables having turnover of more than ₹ 200 crores - The AO will also take into account the bank and finance charges as part of operating expenses of comparables for arriving at the margin AO will only take segmental results relating to services only for comparing the companies M/s. Kals Information Systems, Avani Cincon, LGS Global Ltd. and Bothtree Consulting Systems as the consolidated results of these companies cannot be compared with the assessee, as assessee is admittedly into service providing activities - if segmental results of the companies relating to similar services as being provided by assessee are not available, then these companies will have to be excluded as comparables Decided in favour of assessee.
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