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2017 (12) TMI 1680 - HC - Income TaxTP Adjustment - exclusion of six comparables in the transfer pricing study and arm‟s length price assessment - functional similarity - interest income exemption in view of Section 10A - HELD THAT:- The assessee is engaged primarily in software development, specifically in healthcare claims adjudication and bio-pharmaceutical services. The functional profile of the comparables, noticed the two authorities, was entirely different because E-Infochips Bangalore Ltd. and Infinite Data Systems Pvt. Ltd. were primarily concerned with technology and software development in contrast of the assessee‟s expertise which was software development services. This Court is of the opinion that having regard to the findings in respect of the two comparables, no question of law arises. Revenue has to ensure the functional similarities and exclude comparison of entities where there are significant dissimilarities as in the case of Accentia Technologies Ltd. As far as the TCS E-Serve Ltd. and TCS E-Serve International Ltd. are concerned, the ITAT was of the opinion that these entities had to be excluded having regard to the established „brand value‟ which drew the profitability upward and secondly, that the merger of the one entity had resulted in distortion of the profit figures. This Court had recently in Pr. Commissioner of Income Tax Vs. B.C. Management Services Pvt. Ltd. [2017 (12) TMI 255 - DELHI HIGH COURT], upheld the identical reasoning. Therefore, no question of law arises with respect to the exclusion of these two comparables. Having regard to the submissions made and the material on record, especially the ITAT‟s observations that I-Gate Global Solutions Limited‟s functioning is similar to that of the assessee, the appeal deserves to be admitted on that aspect. Admit the following questions of law arise for consideration:- i) Did the ITAT fall into error in holding that I-Gate Global Solutions Limited underwent significant change in its profitability in view of the amalgamation undergone, having regard to the report and materials on record and the circumstances of the present case? (ii) Did the impugned order err in law in holding that any interest income derived by the assessee could be treated as falling under Section 10A of the Act?
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