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2020 (11) TMI 335 - AT - Income TaxTP Adjustment - Comparable selection - functional similarity - HELD THAT:- The assessee is primarily engaged in the business of development of software and other allied services to its AE thus companies functionally dissimilar with that of assessee need to be deselected. Acropetal Technologies Limited - Income from software development services is less than 75% of the total revenue and the company is not comparable towards software development service provider. e-Zest Solutions Limited rendering product development and end to end technical services which comes under the category of KPO services and this cannot be compared to software development providers. E-Infochips Limited company is engaged in diverse activities such as product development and provisions for IT enabled services for which no separate segmental information is available in its Annual Report. On the contrary, the diverse activities of software development and IT enabled services are considered and reported together in one segment. Thus, in the absence of such segmental details, the company is functionally not comparable to assessee which is a captive software development provider. ICRA Techno Analytics Limited - company has significant growth in the business intelligence and analytics space which shows that the activities carried out are different from that the assessee. The revenue recognition policy of the company also shows that the company is engaged in rendering diverse services. The services rendered by the company as per its website also include services akin to IT enabled services/KPO services. Persistent Systems & Solutions Limited to be excluded from the list of comparables as composite data of revenue as well as margins of this company pertaining to the sale of software services and products cannot be considered as comparable with the software development services segment of the assessee. Since we have directed the exclusion of five comparables, the final list of comparable is only Evoke Technologies Private Limited and R S Software (India) Limited. The assessee's margin being 14.87% for provision for software development services would be more than the arithmetical means of the working capital adjusted margin of the above two comparables. Therefore, the international transaction of provision of software development services by the assessee to its AE for the relevant assessment year is to be concluded as being at Arm's length. It is ordered accordingly. Non-receipt of refund for the assessment year 2011-2012 - HELD THAT:- As DRP had directed the A.O. to verify the objections of the assessee and take necessary action in the matter. However, we find that in the final assessment order no such examination/verification has been done by the A.O. Therefore, we direct the A.O. to examine the objections of the assessee whether it was not in receipt of refund for the relevant assessment year.
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