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2023 (8) TMI 667 - AT - Income TaxTP Adjustment - Comparable selection - HED THAT:- Larsen & Toubro Infotech Ltd.and Infosys Ltd. - As present assessee is found to be a captive service provider who carries out software development services in accordance with the direction of its associated enterprises and is compensated on a cost+mark-up basis. Therefore in our considered opinion, both the comparables cannot be considered to be fit for being included. R Systems International Ltd. - This Tribunal in ACI Worldwide Solutions Pvt. Ltd. [2022 (5) TMI 1491 - ITAT BANGALORE] has restored R Systems International Ltd. with the direction to verify if the said company has prepared the financials for financial year ending on March 31 or if it could be reasonably extrapolated. We accordingly remand this comparable to the Ld.AO/TPO for reverification based on similar direction. Persistent Systems Ltd. - As this company is mostly into product development and owns huge intellectual properties. It is also noted that there is no segmental details available in respect of the various systems of revenue earned by this company. Under such circumstances, we do not find it appropriate to be included in the final list. Accordingly we direct the Ld.AO/TPO to exclude this company. Tata Elxsi Ltd. - Admittedly this company is into research and development activities and has developed various product design, industrial design etc. It is also noted that though this company is into software development services, in the process has developed various products that has been sold and revenue has been generated from sale of products. The segmental details in respect of software services rendered and product sale is not available in the financials of this company. It is noted that in case of Infor (India) Pvt. Ltd. [2023 (3) TMI 597 - ITAT HYDERABAD] for similar reason has excluded this company from the final list. We therefore direct this comparable to be excluded from the final list as it is not comparable with a captive service provider like that of assessee. Infobeans Technologies Ltd. - As relying on case of case of Airlinq [2022 (8) TMI 1283 - ITAT BANGALORE] we direct the Ld.AO/TPO to exclude this company from the final list. Sasken Communication Technologies Ltd. - As submitted this comparable has been excluded by the Ld.TPO as it is involved in R&D activities and owns huge patents. We have hereinabove excluded Infosys Ltd., L&T Infotech Ltd. for the reason that they are into research and development activities and owns huge intangibles which is not akin to a captive service provider. Applying the same principle, we do not find any infirmity in exclusion of Sasken Communication Technologies Ltd. by the Ld.TPO. TP Adjustment with respect to outstanding receivables - AR has objected by submitting that no interest is attributable as the same was not charged by the AEs on any delayed payment by the assessee - HELD THAT:- This Bench referred to decision of Instrumentation Corpn. Ltd. [2016 (7) TMI 760 - ITAT KOLKATA], held that outstanding sum of invoices is akin to loan advanced by assessee to foreign AE., hence it is an international transaction as per explanation to section 92 B of the Act. We deem it appropriate to set aside the impugned order on this issue and remit the matter to the file of the Ld.AO/TPO for deciding it in conformity with the above referred judgment. We also direct the Ld.TPO that in the event the WCA subsumes the outstanding receivables, no separate characterisation is to be made. However for those receivables that fall out of the WCA pertaining to year under consideration, then, the rate of interest to be charged must be LIBOR + 300 basis points which is in accordance with the principles laid down in case of CIT vs. Cotton Naturals (I) Pvt. Ltd. [2015 (3) TMI 1031 - DELHI HIGH COURT] by considering a credit of 90 days. Needless to say, the assessee will be allowed a reasonable opportunity of being heard in such fresh proceedings.
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