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2015 (10) TMI 2020 - AT - Income TaxTransfer pricing adjustment - selection of comparables - Held that:- M/S.Accel Transmatic Limited (seg.), Avani Cincom Technologies Ltd., Celestial labs Limited and KALS Infosystems Ltd., are concerned, this Tribunal in the case of First Advantage Offshore Services Pvt. Ltd. Vs. DCIT [2012 (9) TMI 924 - ITAT BANGALORE] held that the aforesaid companies are not comparable companies in the case of software development services provider. As far as comparable companies listed at Sl.No.11 & 14 of the final list of comparable companies chosen by the TPO viz., M/S.Ishir Infotech Ltd. And Lucid Software Ltd. and companies listed at Sl.No.16 of the final list of comparable companies chosen by the TPO viz., M/S.Megasoft Limited is concerned, this Tribunal in the case of First Advantage Offshore Services Pvt. Ltd. Vs. DCIT IT (TP) [2012 (9) TMI 924 - ITAT BANGALORE] held that the aforesaid companies are not comparable companies in the case of software development services provider. The nature of services rendered by the Assessee in this appeal and the Assessee in the case of First Advantage Offshore Services Pvt.Ltd.(supra) are one and the same. This fact would be clear from the fact that the very same 26 companies were chosen as comparable in the case of the Assessee as well as in the case of First Advantage Offshore Services Pvt.Ltd.(supra). As far as comparable companies listed at Sl.No.10, 24 & 26 of the final list of comparable companies chosen by the TPO viz., M/S.Infosys Technologies Limited, Tata Elxsi Ltd. (Seg.) & Wipro Limited are concerned, this Tribunal in the case of M/S. Curam Software International Pvt.Ltd. Vs. ITO [2014 (2) TMI 229 - ITAT BANGALORE] has held that the aforesaid companies are not comparable companies in the case of software development services provider As far as comparable companies at Sl.No.5, 18, 19 and 25 of the final list of comparable companies chosen by the TPO are concerned, viz., M/S. E-Zest Solutions Ltd., Persistent Systems Ltd., Quintegra Solutions Limited and Third ware Solutions Ltd., this Tribunal in the case of 3DPLM Software Solutions Ltd. I.T (2014 (12) TMI 612 - ITAT BANGALORE) order was pleased to hold that the aforesaid companies are not comparable with a company engaged in Software Development Services such as the Assessee. As far as comparable chosen by the TPO at Sl.No.8 of the final list of comparable viz., M/S.Helios & Matheson Information Technology Ltd., we find that the said company has been held to be not comparable with a software service provider like the Assessee by the ITAT Pune Bench in the case of PTC Software (India)Pvt.Ltd. [2013 (4) TMI 741 - ITAT PUNE] Flextronics Software Systems Ltd., iGate Global Solutions Ltd.,Mindtree Ltd., Persistent Systems Ltd,Persistent Systems Ltd,Tata Elxsi Ltd., Wipro Ltd. and Infosys Technologies Ltd. should be excluded from the list of comparable companies as relying on Trilogy E-Business Software India Pvt.Ltd. [2013 (1) TMI 672 - ITAT BANGALORE] . The AO is directed to compute the Arithmetic mean by excluding the aforesaid companies from the list of comparable. The AO/TPO is directed to compute the arithmetic mean of the profit margins of the remaining comparable companies after excluding the companies from the final list of 26 comparable companies chosen by the TPO and compare the same with the profit margin of the Assessee in accordance with the provisions of Sec.92C of the Act. Computation of deduction u/s 10A - Held that:- Taking into consideration the decision rendered by the Hon’ble High Court of Karnataka in the case of CIT v. Tata Elxsi Ltd [2011 (8) TMI 782 - KARNATAKA HIGH COURT] we are of the view that it would be just and appropriate to direct the Assessing Officer to exclude telecommunication charges, consultancy charges, repairs and maintenance and certain other expenses incurred by the Assessee (including expenses incurred in foreign currency), both from export turnover and total turnover, as has been prayed for by the assessee in ground - Decided in favour of assessee.
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