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2019 (5) TMI 1194 - ITAT PUNETP Adjustment - international transaction of provision of software development services - comparable selection - functional similarity - HELD THAT:- Cybermate Infotek Ltd. being engaged in both sale of software products and also providing software development services and in the absence of any segmental details of two divisions being available, the margins of said concern cannot be applied in order to benchmark arm's length price of international transactions undertaken by the assessee, which was solely engaged in providing software development services. Cybercom Datamatics Information Solutions Ltd. also cannot be included in final list of comparables while benchmarking international transactions of assessee of providing software development services to its associated enterprises. Infobeans Systems Pvt. Ltd. is also not to be included in the final list of comparables as the financials of said concern clearly reflect that in addition to providing software development services to its associated enterprises, it had also earned foreign exchange from export of goods on FOB basis. The event of export of goods was also mentioned in notes and also in the Profit and Loss Account, where revenue from sale of software was declared. The segmental details of two activities carried on by the said concern were not available and in the absence of the same, the concern could not be equated as functionally comparable to a concern which was providing software development services to its associated enterprises Thirdware Solutions Ltd not functionally comparable to the assessee E-Zest Solutions Ltd. cannot be held to be functionally comparable to the assessee as it was engaged in provision of KPO services. Accordingly, we hold that concerns Cybercom Datamatics Information Solutions Ltd., Cybermate Infotek Ltd., Thirdware Solutions Ltd., Infobeans Systems Pvt. Ltd. and E-Zest Solutions Ltd. are to be excluded from final list of comparables while benchmarking international transactions undertaken by assessee. - Decided in favour of assessee.
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