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2021 (11) TMI 851 - AT - Income TaxTP adjustment - Comparable selection - international transactions pertaining to provision of sales and marketing support services - Comparability of Axis Integrated Systems Limited - HELD THAT:- Axis is engaged in the business of trading digital signatures. Further, Axis is also engaged in providing Liasioningservices in the area of service tax, excise, foreign trade policy licensing, duty free credit entitlement certificates, etc -Axis develops and owns unique intellectual property tool 'Axis Mine'. Judicial Pronouncements supporting exclusion of companies deriving significant benefit from proprietary process - See M/S ROLLS ROYCE MARINE INDIA PVT. LTD. [2014 (11) TMI 429 - ITAT MUMBAI],GLOBAL LOGIC INDIA PVT. LTD.[2015 (6) TMI 132 - ITAT DELHI],GENZYME INDIA PVT. LTD. [2018 (4) TMI 1772 - ITAT DELHI] - Axis rejected as a comparable as relying on LI AND FUNG (INDIA) PVT. LTD. [2018 (5) TMI 1009 - ITAT DELHI]. Unearned revenue from subscription services - HELD THAT:- As decided in own case we find that assessee has been following consistent system of revenue recognition. The assessee is inter alia engaged in the business of marketing, promotion and sale of 'Red Hat subscriptions' to customers in Indian sub-continent to avail support services that are for the open source software system during the subscription period ranging from one to seven year, which is established by the special services agreement or contract. AO has clearly erred in changing consistently followed method of revenue recognition adopted by the assessee.We find due merits of the revenue recognition adopted by the assessee which is duly supported by mandate of AS-9 and other parameters referred above - it is also a settled law that unless there is change in the facts and circumstances or that it can be said that earlier adopted system was wrong, revenue recognition method cannot be disturbed. We note that such case exists here. In these circumstances, we set aside the order of the Assessing Officer and delete the addition in this regard.- Decided in favour of assessee.
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