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2023 (4) TMI 270 - AT - Income TaxTP Adjustment - comparable selection - HELD THAT:- Infobeans Technologies Ltd. (Infobeans) cannot be treated as comparable to the assessee as it is not functionally similar. Accordingly, we direct the AO to exclude this company from the list of comparables. Cybercom Datamatics Information Solutions Ltd. (Cybercom) company is engaged into diversified activities, including provision of software services. However, the segmental details relating to various segments are not available in public domain. Further, unlike this company, the assessee is not providing technical services. Thus , we direct the Assessing Officer to exclude this company as a comparable. Octaware Technologies Limited (Octaware) - Revenue earned during the years is from software development services. There is no other stream of revenue reported by the company. Thus, the contention of learned counsel for the assessee that the company is having more than one segment and is into development of products is not borne out from record. Further, it is relevant to observe, TNMM makes room for broad comparability. Considering the fact that this company is earning revenue from only one segment, viz., software services, we hold that it can be treated as a comparable to the assessee. Therefore, we do not find merit in the submissions of the assessee. Infosys BPO cannot be treated as comparable to the assessee.Undisputedly, the assessee is a purely captive service provider and minimal risk bearing entity. Whereas, Infosys BPO is a risk bearing entity having diversified activities. It has the advantage of Infosys brand name and has established itself as a front runner in the BPO sector - turnover of Rs.2323 crores reported by Infosys BPO compared to turnover of Rs.96 crores reported by the assessee makes the assessee a pigmy qua Infosys BPO. MPS Limited (MPS) - No doubt, this company forms part of the list of comparables selected by the assessee in its TP study report - in course of the proceedings before learned DRP, the assessee in its submissions has sought exclusion of this company citing various reasons. As could be seen from the directions of learned DRP, no discussion has been made on acceptability or otherwise of this company as comparable. We are inclined to restore this issue to the Assessing Officer to examine assessee’s claim that the company cannot be treated as comparable. The assessee must be provided reasonable opportunity of being heard on the issue. TP adjustment - imputing interest on outstanding receivables - HELD THAT:- As decided in assessee own case [2021 (11) TMI 1148 - ITAT DELHI] assessee is a debt free company and has no claim of interest payable. Hence, in the specific financial conditions of the assessee, we hold that no adjustment is required on this ground. We restore this issue to the AO for verifying assessee’s claim, keeping in view the decision of the Tribunal in assessment year 2015-16 (supra) after providing reasonable opportunity of being heard to the assessee. This ground is allowed for statistical purposes.
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