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2019 (10) TMI 1418 - AT - Income TaxTP Adjustment - comparable selection - exclusion of Persistent Systems Ltd., from the list of comparable companies - HELD THAT:- As decided in CERNER HEALTHCARE SOLUTIONS P. LTD. VERSUS INCOME TAX OFFICER, WARD-11 (1) , BENGALURU [2017 (1) TMI 1491 - ITAT BANGALORE] when this company is engaged in diversified activities and earning revenue from various activities including licencing of products, royalty on sale of products as well as income from maintenance contract, etc., the same cannot be considered as functionally comparable with the assessee. Further, this company also earns income from outsource product development. In the absence of any segmental data of this company, we do not find any error or illegality in the findings of the DRP that this company cannot be compared with the assessee and the same is directed to be excluded from the set of comparables. In view of the aforesaid decision of the ITAT, we are of the view that the aforesaid company should be excluded from the list of comparable companies. No other grounds of appeal were pressed for adjudication in the assessee’s appeal. Deduction u/s 10A - reducing the travel and telecommunication charges from the export turnover without reducing the same from the total turnover - HELD THAT:- It is not in dispute before us that the Hon’ble Karnataka High Court in the case of CIT Vs. Tata Elxsi Ltd. [2011 (8) TMI 782 - KARNATAKA HIGH COURT]has held that whatever is excluded from the export turnover should also be excluded from the total turnover while computing deduction under section 10A of the Act. This view of the Hon’ble Karnataka High Court has been upheld by the Hon’ble Supreme Court in the case of CIT Vs. HCL Technologies Ltd.[2018 (5) TMI 357 - SUPREME COURT]. In view of the above, we hold that telecommunication charges should be excluded both from the export turnover as well as from the total turnover and deduction under section 10A computed accordingly.
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