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2019 (8) TMI 1479 - AT - Income TaxTP Adjustment - grievance of revenue is in respect of cherry picking "on-site revenue filter" by DRP suo moto, and selectively applying on certain comparables, thereby excluding them - HELD THAT:- We agree with contention raised by Ld.CIT DR that no new filter can be applied subsequent to Ld.TPO completing TP analysis. However, on perusal of observations by DRP to exclude Acropetal Technologies Ltd., L&T Infotech Ltd., primarily on functional dissimilarities and absence of segmental information Comparable selection - Comparables not functionally similar with that of assessee, who is a contract service provider, working on a cost plus business model need to deselected. RS software (India) Ltd, was excluded by DRP by applying 'on-site revenue filter' - Both parties do not have objection for inclusion of this company. We are therefore of the view that, this company should be included in the list of comparables. Companies rejected on service income being less than 75%. Company having brand value as well as intangible assets cannot be compared with an ordinary entity who provide captive services. Disallowance on account of leave encashment - HELD THAT:- As decided in Global e-business operations (P.) Ltd. [2017 (1) TMI 1618 - ITAT BANGALORE] When a challenge was made before the Hon'ble Calcutta High Court in Exide Industries Ltd and another v. UOI & others [2007 (6) TMI 175 - CALCUTTA HIGH COURT] it struck down section 43B(f) being arbitrary, unconscionable and dehors the Apex Court decision in the case of Bharath Earth Movers Ltd (2000 (8) TMI 4 - SUPREME COURT) as the amendment did not disclose the reasons which would be consistent with the provisions of the Constitution and the laws of the land and not for the sole object of nullifying the apex Court decision. On SLP the SC held that "Pending hearing and final disposal of the Civil Appeal, Department is restrained from recovering penalty and interest which has accrued till date. It is made clear that as far as the outstanding interest demand as of date is concerned, it would be open to the Department to recover that amount in case civil appeal of the Department is allowed - issue is remitted back to the AO to decide the issue based on the outcome of the Hon'ble Supreme Court's decision in the above case. Ordered accordingly Disallowance of software expenditure and electricity deposits by Ld. AEO - Allowable revenue expenses - AR submitted that assessee has substantial and corroborated of evidences to establish that software purchased, did not provide any enduring benefit to assessee, and therefore has to be treated as revenue expenditure and for electricity deposits, assessee submitted that these were actual right of deposits claimed for which provision was created in earlier years - HELD THAT:- On perusal of the orders passed by authorities below it is observed that these details relied upon by Ld.AR has not been verified by Ld.AO. We therefore direct Ld. AO to revisit these issues having regards to the evidences filed by assessee and to consider the claim of assessee as per law.
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