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2021 (11) TMI 1032 - AT - Income TaxTP Adjustment - Comparable selection - HELD THAT:- ICRA Techno Analytics Ltd comparable has been considered as not comparable in the case of Electronics and Imaging India Pvt. Ltd. cited [2016 (2) TMI 1123 - ITAT BANGALORE] Accordingly, we direct the AO /TPO to exclude the same from list of comparables. Infosys Ltd. having a huge brand value and intangibles as well as having bargaining power, the same cannot be compared with the assessee who is providing services to its AE. Persistent Systems Ltd is functionally dissimilar, being engaged in software product development and intellectual property led business. Tata Elxsi company even in the software development segment is engaged in diversified activities of product design services, innovation design, engineering services, visual computing labs, etc. No contrary view has been brought to our notice regarding comparability of this company with that of a pure software development service provider. Accordingly we direct to exclude from the list of comparables. Cat Technologies Ltd.- This has to go back to the file of AO/TPO to verify the related party transaction and if there is no related party transaction, this comparable is to be considered as comparable, while determining ALP of international transactions. With these observations, we remit the issue to the file of AO/TPO for fresh consideration. Disallowance u/s 40(a)(ia) on deprecation claimed on purchase of Software - HELD THAT:- We find force in the argument of the ld.AR in view of the judgment in the case of Engineering Analysis Center of Excellence Pvt. Ltd., [2021 (3) TMI 138 - SUPREME COURT] wherein it is held that software purchased from nonresident is rightly capitalized by assessee in its books of account and are entitled for depreciation u/s 32 of the Act and not allowable to deduct TDS. As such, it cannot be denied depreciation on the purchase of software which has been actually capitalized by the assesee and directed to grant rate of depreciation on purchase of software and this been capitalized by the assessee. Disallowance of depreciation on goodwill - HELD THAT:- Similar issue came up for consideration in assessee’s own case before the Hon’ble Supreme Court in the case of CIT Vs. Simfs Securities Ltd. [2012 (8) TMI 713 - SUPREME COURT] wherein it is held that “A reading of the words "any other business or commercial rig nature" in clause (b) of Explanation 3 to section 32(1) indicates that good-will would fall under the expression. The principle of ejusdem generis would strictly apply while interpreting the expression which finds place in Explanation 3(b). Goodwill is an asset under Explanation 3(b) to section 32(1) of the Act. Where the Commissioner (Appeals) held that the difference between cost of an asset and the amount paid by the assessee constituted good-will and that the assessee in the process of amalgamation had acquired right in the form of goodwill because of which the market worth of the assessee stood increase. Depreciation @ 60% of turnover and net working equipment allowed.
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