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2022 (5) TMI 1450 - AT - Income TaxTP Adjustment - comparable selection - Functional dissimilarity - HELD THAT:- Mind Tree Limited - On presence of onsite revenue over and above the threshold limit of 25% of total revenue, we are of the view that this company should be excluded from the list of comparable companies. Persistent systems Limited - It is a product company and there is no segmental data between product and services segment, presence of onsite activity and the impact of extra-ordinary event of acquisition during the relevant previous year. Therefore, this company is directed to be excluded from the list of comparable company. Infosys Ltd - Difference pointed out by the ld. counsel for the assessee before us show that this company cannot be compared with that of the assessee basically because of its business model, presence of onsite revenue generation and other reasons cited before us. Besides, the reason that turnover of this company is huge and more than 10 times that of the assessee - We direct the AO/TPO to exclude this company from the list of comparables. Thirdware Solutions Pvt. Ltd is to be excluded from the list of comparables. L&T Infotech Ltd - We see the revenue in Schedule M of the profit & loss account, there is no break-up of the revenue with regard to software services and software product. In our opinion, this distinction is enough to exclude this company from the list of comparable companies. Melstar Information Technologies Ltd - A.R. submitted that this company Melstar Information Technologies Ltd. is a loss making company in the last 3 continuous successive assessment years and if there is a profit in any one of the past 3 financial years, then that company cannot be excluded on the basis of persistent loss making filter - it is appropriate to remit the issue to the file of AO/TPO to decide the same in the light of above findings of the Tribunal. Accordingly, the issue is remitted to AO/TPO for fresh consideration. Appropriate adjustments towards working capital - After hearing the parties, we direct the AO/TPO to grant appropriate adjustments towards working capital as directed by Ld. DRP. In other words, actual working capital adjustment to be given. Directed accordingly. Levy of interest u/s 234A - The contention of the A.R. is that the assessee filed the return of income before due date and therefore levy of interest u/s 234A is unwarranted and is to be deleted. Further, it was submitted that draft assessment order did not contain this interest computation. Hence, no ground is raised before the Ld. DRP. This ground is remitted to AO/TPO to consider chargeability of interest u/s 234A of the Act and decide accordingly.
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