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2017 (9) TMI 1831 - AT - Income TaxTP Adjustment - comparable selection - exclusion of FCS Software Solutions Ltd - HELD THAT:- Assessee is engaged in providing software development services to its associated enterprises and is captive service provider, thus companies functionally dissimilar with that of assessee need to be deselected from final list. This view has been laid down by the Tribunal in TIBCO Software India Pvt. Ltd. Vs. DCIT [2017 (1) TMI 1574 - ITAT PUNE] and ACIT Vs. M/s. Synechron Technologies Pvt. Ltd. [2017 (6) TMI 1295 - ITAT PUNE] . Following the same parity of reasoning and because of the said concern being a product company, we find no merit in including in the list of comparables while benchmarking international transactions undertaken by the assessee with its associated enterprises, where it is providing software services to the associated enterprises. Another aspect which needs to be kept in mind is that the CIT(A) had noted from the annual report of the company that the said concern had earned revenue from IT consulting (42%), education (30%) and infrastructure management (21%). However, no breakup of business segment profitability is available and in the absence of the same, the margins of said concern cannot be compared. Another aspect is the activity of education being imparted by the said concern in the field of IT education to corporate companies and institutions, Central and State Government Departments, etc., the said concern thus, is functionally different from the activities undertaken by the assessee and cannot be included in the final list of comparables. Accordingly, we uphold the order of CIT(A) in this regard. The modified ground of appeal No.1 raised by the Revenue is thus, dismissed. The modified ground of appeal No.2 raised by the Revenue becomes academic in nature, in view of the pleading of learned Authorized Representative for the assessee after the dismissal of modified ground of appeal No.1 raised by the Revenue.
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