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2018 (3) TMI 2013 - AT - Income TaxTP Adjustment - comparable selection - Exclusion of Accentia Technologies Limited, TCS Eserve Ltd. and TCS Eserve International Limited - HELD THAT:- Accentia is into the field of medical transcription, billing and coding and also developing its own software products; that it has undergone extra ordinary events making huge addition in its assets impacting profitability because of acquisition and its segmental information is not available; it is not a suitable comparable vis-à-vis. taxpayer which is a routine ITES service provider. So, we order to exclude Accentia from the final set of comparables. TCS Eserve - As following the decision rendered by the coordinate Bench of the Tribunal in Ameriprise India Pvt. Ltd. [2016 (1) TMI 1117 - ITAT DELHI] we are of the considered view that because of functional dissimilarity having high brand value, highly fluctuating margin and huge size of the company and its operation, TCS Eserve is not a valid comparable vis-à-vis. the taxpayer which is into providing back office services related to maintenance and database working on minimal risk having meager turnover of Rs. 14.15 crores. TCS Eserve International is a big brand operating as full-fledged risk bearing company and its profitability has increased by 174% and 286% in FY 2008-09 and 2009-10 respectively due to acquisition and the fact that it is functionally dissimilar, it cannot be a valid comparable vis-à-vis. taxpayer which is into providing back office services related to maintenance and database working on minimal risk as a captive service provider. So, we order to exclude TCS Eserve International as a comparable from the final list of comparables. Deduction u/s 10A - benefit of inclusion of expenditure incurred by the taxpayer in foreign currency towards communication charges and expenditure incurred by the taxpayer in foreign currency in database fee - HELD THAT:- When it is not in dispute that for the purpose of section 10A, the term "total turnover" is to be interpreted by computing the entire export turnover as well as domestic turnover and in case, expenses are to be excluded from export turnover, the same are to be excluded from the total turnover for the purpose of computing the deduction u/s. 10A - AO has erred in not excluding the communication charges and expenditure incurred by the taxpayer in foreign currency in database fees from the total turnover for the purpose of calculating the deduction u/s. 10A - Decided in favour of the assessee.
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