2022 (10) TMI 1287 - AT - Income Tax

TP Adjustments - comparable selection - Functional dissimilarity - extraordinary events - HELD THAT - M/s. E-Infochips Ltd. had undergone an amalgamation as per honourable Gujarat high court s approved scheme. That being the case we hold that the foregoing extraordinary event of amalgamation renders M/s. E-Infochips Ltd. as not a valid comparable as already held in assessee s appeal itself 2022 (7) TMI 1339 - ITAT PUNE . We thus adopt judicial consistency to exclude M/s. E-Infochips from the array of comparables. The very factual position continuous regarding the latter three entities herein M/s. Cybage Software Pvt. Ltd. Exilant Technologies Pvt. Ltd. ad E-Infochips Ltd. wherein the learned co-ordinate bench has inter-alia concluded that they are engaged in other computer related activities than software services property development and varied services and lack of availability of financials; respectively. We thus follow judicial consistency and direct exclusion of these remaining three companies from the list of comparables.

Summary

The Appellate Tribunal (ITAT Pune) adjudicated an appeal for A.Y. 2017-18 against the National Faceless Assessment Centre's order under section 92CA(3) of the Income Tax Act concerning ALP adjustment of Rs. 9,04,85,400 in software development and support services. The assessee contested inclusion of four comparables: M/s. E-Infochips Ltd., Cybage Software Pvt. Ltd., Exilant Technologies Pvt. Ltd., and E-Infochips Ltd.The Tribunal, emphasizing judicial consistency, excluded M/s. E-Infochips Ltd. as a valid comparable due to its amalgamation under a Gujarat High Court-approved scheme effective 01.04.2015, aligning with a coordinate bench's prior ruling (ITA No. 194/PUN/2021 for AY 2016-17). Further, the remaining three companies were excluded because they were engaged in activities other than software services, involved property development, or lacked financial data, as per earlier coordinate bench findings.The Tribunal held: "We thus adopt judicial consistency to exclude M/s. E-Infochips from the array of comparables" and directed recalculation by the TPO accordingly. The appeal was allowed to this limited extent.