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2015 (1) TMI 917 - AT - Income TaxTransfer pricing adjustment - selection of comparables - Held that:- Coral Hubs Ltd. (Vishal Information Technologies Ltd.) has to be excluded from the list of final comparables on the ground that this company has outsourced its considerable portion of its ITES business, whereas the assessee is carrying out entire operation by itself. M/s. Eclerx Services Ltd. has to be excluded from the list of final comparables as if the functions actually performed by the assessee company for its AEs are compared with the functional profile of M/s. eClerx Services Pvt. Ltd. and Mold-Tec Technologies Ltd., it is difficult to find out any relatively equal degree of comparability and the said entities cannot be taken as comparables for the purpose of determining ALP of the transactions of the assessee company with its AEs. Accentia Technologies Ltd. cannot be considered to be comparable in the present year for bench marking the margin of the assessee’s company as it is evident from the annual report for the A.Y. 2008-09 that it has not started its data processing outsourcing or KPO services, it cannot be held to be a good comparable for bench marking the assessee’s margin. R. System International Ltd. (Segmental), TPO himself has accepted it as a good comparable and DRP in A.Y. 2008-09 has also accepted the same to be comparable, which has been upheld by the Special Bench, therefore, we do not find any reasons to deviate from such a precedence of the earlier years, so as to come to a different conclusion without any material difference on record for this year. Thus, we direct the TPO/AO to include R. System International Ltd. in the list of final comparables for bench marking the assessee’s margin. Allsec Technologies Ltd. was considered to be a good comparable right from the A.Y. 2005-06 to 2007-08. In A.Y. 2008-09, it was not accepted to be comparable as there was an extraordinary event of merger. So far as TPO’s allegation that it is a consistent loss making company, we find that it is only in this year i.e., in A.Y. 2009-10 it has incurred loss, otherwise it was profit making company as stated above. This cannot be the sole ground for rejecting it as comparable. TPO/AO is directed to work out the final average mean of the comparables as per the directions given above and bench mark the assessee’s margin. If the margin of the comparables falls within +/- 5 range, then needless to say that, no adjustment should be made. - Decided in favour of assessee for staistical purposes. Software license expenses disallowed - Held that:- This matter should be restored back to the file of the AO to consider the allowabilty of software expenses in the light of decision of Delhi High Court in the case of CIT Vs. Asahi India Safety Glass Ltd. (2011 (11) TMI 2 - DELHI HIGH COURT ) and CIT Vs. Raychem RPG Ltd. (2011 (7) TMI 953 - Bombay High Court) wherein held that the software expenses should be allowed as revenue expenses.. - Decided in favour of assessee for staistical purposes. Addition on account of mismatch of interest income as per certificate of TDS vis-a-vis interest income shown as per books of account - Held that:- assessee had shown accrued interest for ₹ 39,64,386/- in its P&L Account in the A.Y. 2008-09. As per the TDS certificate for the year ending 31st March, 2008, interest of ₹ 26,92,977/- has been shown to be earned in A.Y. 2008-09. Thus the assessee seems to have offered excess interest income on accrual basis. There is thus apparent mismatch in the interest income as per the books and TDS certificate. Therefore, in the interest of justice, we restore this matter back to the file of the AO, to examine this issue and if the interest income which is a part of TDS certificate in this year has already been taxed in the earlier years, then the same should not be doubly taxed here in this year also. The assessee will furnish requisite reconciliation and information to the AO. - Decided in favour of revenue for statistical purposes.
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