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2016 (9) TMI 1483 - AT - Income TaxTPA - Comparable selection - functinal similarity - Held that:- The assessee company is engaged in the business of software development research center and provides software development services of electronic integrated circuits. It also provide support services to Infineon, Singapore. The operation of the assessee are organized into 2 business development center (STPI unit) and sales and market support division (non STPI unit) thus companies functionally dissimilar with that of assessee need to be deselected from final list. Disallowance of project specific costs u/s 40(a)(i) - Held that:- This issue is covered against the assessee and in favour of Revenue by the decision of the Hon'ble High Court of Karnataka in the case of Samsung Electronics Co. Ltd. [2011 (10) TMI 195 - KARNATAKA HIGH COURT]. Adjustments made to the Total turnover in computing deduction u/s 10A - Held that:- Issue covered by the decision of Tata Elxsi [2011 (8) TMI 782 - KARNATAKA HIGH COURT]. Lower deduction u/s 10A - profits of the software (STPI) unit as ₹ 297,319,880/- instead of ₹ 181,072,777/- - Held that:- We direct the TPO to correct the error which has crept in while computing deduction u/s 10A and take the profit of software unit at ₹ 181,072,777/- Market risk adjustment - Held that:- As decided in INTELLINET TECHNOLOGIES INDIA (P.) LTD. VERSUS INCOME-TAX OFFICER, WARD-11(2), BANGALORE [2012 (6) TMI 237 - ITAT BANGALORE] in principle, risk adjustment must be granted, if warranted in the facts of the case, for bringing the comparables on par with the assessee company. Following the above decision and of the co-ordinate bench (supra), we also hold that in principle, the assessee may be granted risk adjustment, if so required in the peculiar facts of the case for bringing the comparable companies on par with the assessee. However, the quantum of risk adjustment to be granted, if any, is remanded back to the file of the TPO. The TPO is directed to examine the details of the quantitative computation of risk adjustment and attendant details submitted by the assessee justifying its claim for risk adjustment and to take into account the same along with all the relevant material before deciding on the percentage of risk adjustment to be allowed. Depreciation adjustment allowance of depreciation adjustment - Held that:- As relying on 24/7 CUSTOMER. COM (P.) LTD. VERSUS DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE 11 (2) , BANGALORE [2013 (1) TMI 45 - ITAT BANGALORE] admit the additional ground raised for grant of depreciation adjustment and remit the matter to the file of the TPO to consider and examine the assessee's claim for adjustment towards depreciation - Appeal is partly allowed for statistical purposes.
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