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2019 (2) TMI 227 - AT - Income TaxTPA - comparable selection - application Related Party Transaction (RPT) filter i.e. excluded companies which had transactions with related parties - Held that:- Application of RPT filer at 15% of the sales would be appropriate in the given facts and circumstances of the case and as laid down in the case of Auto Desk India Pvt. Ltd. [2018 (7) TMI 1862 - ITAT BANGALORE], we hold accordingly and direct to inclusion of 3 companies which were excluded by application of RPT Filter by the DRP. Assessee is a pure software development services company thus companies functionally dissimilar with that of assessee need to be deselected from final list. Interest on Sundry debtors outstanding for more than 3 months - Held that:- The plea of the assessee has to be accepted as held by the Bangalore Bench in the case of Avnet India Pvt. Ltd., [2016 (1) TMI 410 - ITAT BANGALORE] that giving a credit period cannot be considered as an independent transaction. It is a integral part of transaction of rendering of software development services by the assessee to its AE and has to be considered as part of the international transaction of Software Development Services. The decision of Mumbai Bench of Tribunal in the case of Goldstar Jewellery Ltd., Vs. JCIT [2015 (2) TMI 58 - ITAT MUMBAI]. URO supports the plea of the assessee. Following the aforesaid decision, we hold that there can be no separate determination of ALP of international transaction of realization of sale proceeds with extended credit period as it is only incidental to transaction of sale. The addition made by the TPO and confirmed by the DRP cannot be sustained and the same is directed to be deleted. Disallowance of depreciation on software expenses under section 40(a)(ia) read with section 194J - Held that:- As decided in M/S. WINTAC LIMITED VERSUS DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE 12 (5) , BENGALURU [2017 (4) TMI 819 - ITAT BANGALORE] once the assessee has capitalized the payment in question though the assessee has not deducted the tax at source on such payment, Section 40(a)(i) cannot be invoked for disallowance of depreciation. Accordingly, we set aside the orders of the authorities below and the addition made by the AO is deleted.
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