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2022 (10) TMI 836 - AT - Income TaxTP adjustment - treating the overseas associated enterprises as 'tested party' - HELD THAT:- Foreign AEs are least complex entities and therefore, should be treated as tested parties and thus, no interference is called for with the order of Ld. CIT(A) in treating foreign AEs as tested party. Accordingly, grounds raised by the revenue on this issue for both the assessment years are dismissed. Nature of expenses - treatment of expenses incurred on software as revenue or capital - HELD THAT:- Considering the factual matrix of the present case which are similar to the fact based findings given in the preceding assessment years by the Co-ordinate Bench of ITAT, Kolkata in assessee’s own case [2020 (2) TMI 1222 - ITAT KOLKATA] So, also by considering the critical analysis done by the Ld. CIT(A) who had figured out the software expenses as capital asset, we do not find any infirmity in the order of Ld. CIT(A) on this issue and accordingly, ground raised by the revenue on this issue for AY 2014-15 is dismissed. Segmental accounts for establishing arms length price - HELD THAT:- From the factual position of the present case, where the segmental data of I2A and I2B for transaction with the assessee are placed on record against which the margin of the assessee has been bench marked for its arms length price, respectfully following the findings given by the Co-ordinate Bench in assessee’s own case [2020 (2) TMI 1222 - ITAT KOLKATA], we do not find any infirmity with the findings given by the Ld. CIT(A) and accordingly, delete the additions made in this respect. Accordingly, grounds taken by the revenue on this issue for AY 2015-16 are dismissed. Transfer Pricing adjustments in respect of export of software services and receipt of account management charges - HELD THAT:- We find that the TPA are primarily on the basis of issues which have already been dealt in these two present appeals in the above paragraphs relating to selection of tested party as foreign AEs and acceptance of segmental accounting data vis-à-vis entity level data of the foreign AEs. TPO has rejected the claim of the assessee of taking the tested party as foreign AEs and resorted to taking comparables from the domestic companies. TPO resorted to the entity level data of the domestic companies taken by him as comparables for the purpose of bench marking done by him in respect of the transfer pricing adjustments. Transfer Pricing adjustments on this issue has also been made in AY 2014-15. Revenue is in appeal before us for AY 2014-15, but not on this issue. Further, from the ‘feasibility of appeal before ITAT report’ placed on record in AY 2014-15, we note that no such ground of appeal has been recommended/approved for the transfer pricing adjustment made towards export of software services and payment of account management charges. Further, we have already given our findings in respect of the two issues which formed the basis of adopting tested party as foreign AEs and acceptance of segmental accounting data for the purpose of bench marking, in favour of the assessee and against the revenue. Thus, the premise on which Ld. TPO has made the transfer pricing adjustment itself does not stand and the bench marking exercise adopted by the Ld. TPO cannot be upheld. We also note that Ld. CIT(A) has considered the factual matrix as well as the judicial precedents of the preceding years in assessee’s own case which are also on same pattern as in the present case and thus, we do not find any reason to interfere with the findings arrived at by the ld. CIT(A) in deleting the transfer pricing adjustment made by the Ld. TPO. Accordingly, we uphold the findings of the Ld. CIT(A) and dismiss the ground raised by the revenue on this issue.
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