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2015 (4) TMI 147 - AT - Income TaxTransfer pricing adjustment - selection of comparable - Held that:- Avani Cimcon Technologies Ltd. cannot be treated as comparable as this company is into product development. As segmental details of operating income of software development services and sale of software products are not available, it could not be ascertained whether the profit ratio of this company can be taken into consideration for comparing with the assessee. Celestial Labs Ltd. is not comparable to the assessee as the functions are not similar. Further, on a perusal of the order of the DRP, it is to be seen that two of the members of the panel on considering the fact that in many other cases Celestial Labs Ltd., was not treated as comparable on the ground that it is not involved in development of software services have differed from the final order passed by the panel. Infosys Technologies Ltd. and Wipro Ltd. cannot be considered as comparables to the assessee as they are industrial giants not only on account of quantum of revenue earned by them but due to various other factors like reputation, brand value, goodwill etc. Mega Soft Ltd.cannot as it is predominantly a product development company and the margin from software development services is only 23.11% we direct Assessing Officer/TPO to consider only segmental margin of this company for the relevant AY for computing ALP. Thus direct the Assessing Officer/TPO to compute the ALP afresh Exemption u/s 10A – manner of computation - Communication and freight expenses reduced from the export turnover only while computing deduction u/s 10A of the Act - Held that:- Following the decision of CIT Vs.Gemplus Jewellery, [2010 (6) TMI 65 - BOMBAY HIGH COURT] and ITO Vs Saksoft Ltd (32009 (3) TMI 243 - ITAT MADRAS-D) we direct the AO to exclude the communication expenses from export turnover as well as total turnover while computing deduction u/s 10A of the Act. Appeal of the assessee is partly allowed.
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