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2022 (7) TMI 1382 - AT - Income TaxTP Adjustment - comparable selection - SDS segment - exclude Bhilwara Infotechnology Ltd. From the final set of comparables for software development services segment - HELD THAT:- CIT(A) holds that this company earns its entire revenue from software and its related segment from the domestic market. The extract of the annual report clearly specifies that “Software Development Services (SDS) segment is 100% domestic. Therefore, this company was rightly removed as a comparable in the software development service segment by the ld. CIT(A). Ground No. 2 of the Revenue’s appeal is dismissed. Inclusion of Aspire Systems (India) Pvt. Ltd. in the final set of comparables for software development services segment - CIT(A) has directed exclusion of this company - As in view of the judgment of Hon’ble Jurisdictional High Court in the case of PCIT Vs. J.P. Morgaon India (P) Ltd. [2019 (1) TMI 1274 - BOMBAY HIGH COURT] this company was excluded from the final list of comparable companies. Considering the totality of the facts and circumstances, the finding of the ld. CIT(A) does not call for any interference and the same is upheld. IT Enabled Services segment - Revenue wants exclusion of Jindal Intellicom Ltd., from the final set of comparables in IT Enabled Services segment - We find that the view taken by the learned T.P.O is taken to reject this company from the list of comparable due to foreign exchange less than 75%. In the case of this company, its export turnover ratio is 70.80% and it cannot be said that there is only a minor deviation from the percentage of filter of 75% as applied by the ld. T.P.O. Therefore, in the given facts and circumstances the reliance placed by the assessee on the decision of Mercer Consulting [2016 (8) TMI 1163 - PUNJAB AND HARYANA HIGH COURT] is misplaced. Even going by spirit by the aforesaid decision what is minor deviation and what is major deviation, it all depends on the facts of each case. In our considered view in this case, failure regarding export filter at 70.8% instead of 75% is not a minor deviation. Therefore, we uphold the order of the T.P.O directing rejection of this company as comparable. Ground No. 4 of the Revenue is allowed. Excluding MPS Ltd. from the final set of comparables for ITes segment - MPS Limited is functionally different from that of the assessee company in more-so that high end activities of MPS Ltd is akin to IT services and not ITes - we direct the AO/TPO to exclude MPS Limited from final list of comparable companies. M/s. Domex E-Data Pvt. Ltd., CES Ltd. and Manipal Digital Systems Pvt. Ltd. deselected from the final set of comparables as dissimilar with regard to ITes segment Exclusion of One Touch Solutions (India) Pvt. Ltd.- It has been analysed by the ld. CIT(A) that this company is into ITES activity and therefore, it is included as comparable in the final set of comparables. Taking the totality of the facts and circumstances and the functional spectrum of the assessee, we are in conformity with the view taken by the ld. CIT(A) and we uphold the inclusion of this company in the final set of comparables in respect of the assessee.
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