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2015 (1) TMI 600 - AT - Income TaxTransfer pricing adjustment - selection of comparables - Held that:- Infosys Ltd. as having turnover far in excess of the assessee and assessee was a miniscule company when compared to Infosys Ltd., thus cannot be considered as a comparable and has to be excluded for working out the average PLI of the comparables. KALS and Accel Transmatics Ltd being a software product company, thus excluded from the comparables. Tata Elxsi Ltd. has to be excluded from the list of comparable chosen by the TPO as the assessee before us is not developing any niche product. Lucid Software Ltd. was not functionally similar to the assessee and the same has to be excluded from the comparables There is no dispute that RPT filter in the case of Megasoft Ltd. was 17.08%, that of Aztech Software Ltd. was 17.78% and that of Geometric Software Ltd. was 19.34%. Coordinate Benches of the Tribunal are consistently following 15% as cut off mark for applying the RPT filter. Accordingly, we direct exclusion of Megasoft Ltd., Aztech Software Ltd. and Geometric Software Ltd. from the comparables. Based on the above, direct the AO to recomputed the Profit Level Indicator and work out the arithmetic mean margin of the comparables. Thereafter, the AO has to decide whether the PLI of the assessee is within +/- 5% range of the arithmetic mean of the comparables as set out u/s. 92C(2) of the Act and decide on the adjustment, if any, required on the ALP. - Decided in favour of assessee for statistical purposes. Exclusion of telecommunication expenditure from its export turnover - Corporate tax issues - Held that:- Alternative ground taken that if such expenditure is excluded from the export turnover, it has to be excluded from the total turnover also is acceptable in view of the judgment in the case of CIT v. Tata Elxsi Ltd.[2011 (8) TMI 782 - KARNATAKA HIGH COURT] wherein held that if export turnover in the numerator was to be arrived at after excluding certain expenditure, it should also be excluded from the total turnover. Decided partly in favour of assessee.
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