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Showing 321 to 340 of 1054 Records
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2011 (2) TMI 1315
Issues:
Assessment of tax on disclosed turnover, burden of proof on the assessee regarding purchases made within the State of U.P., granting exemption on turnover, interpretation of Section 12A of the U.P. Trade Tax Act.
Analysis:
The case involved a revision against the Tribunal's order for the assessment year 1994-95 concerning the tax assessment on the disclosed turnover of the applicant, who was in the business of motorcycle and scooter parts. The assessing authority levied tax on the disclosed turnover as the sale of imported motor parts since the assessee failed to produce purchase vouchers or appear before the authority. The Deputy Commissioner (Appeal) partially allowed the appeal, considering that some purchases might have been made within the State of U.P. and some from outside. Both the applicant and the Commissioner, Trade Tax, appealed to the Tribunal. The Tribunal granted exemption on the entire disclosed turnover, treating it as sales of U.P. purchased goods, citing lack of evidence of import or use of form XXXI.
The main issue revolved around the burden of proof on the assessee regarding purchases made within the State of U.P. Section 12A of the U.P. Trade Tax Act places the burden on the assessee to prove the origin of purchases related to the disclosed sales. The assessing authority, first appellate authority, and the Tribunal had differing views on the matter, with the Tribunal granting exemption based on the assumption of U.P. purchased goods due to lack of evidence of import or use of form XXXI. However, the High Court held that the burden lay on the assessee to provide particulars of purchases to substantiate claims of sales from within the State of U.P.
The High Court emphasized the importance of evidence and compliance with statutory provisions in tax assessments. It noted that the applicant failed to produce purchase vouchers or establish that the sales were related to goods purchased within the State of U.P. The Court interpreted Section 12A of the Act, highlighting the requirement for the dealer to disclose full particulars of purchases to claim exemption. As the applicant did not fulfill this burden of proof and lacked evidence of import or use of form XXXI, the Tribunal's exemption was deemed erroneous. Consequently, the High Court allowed the revision, setting aside the Tribunal and first appellate authority's orders, and reinstated the assessing authority's order.
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2011 (2) TMI 1314
Whether collection of the alleged tax due from the petitioner by the respondents, cannot be held to be valid in the eye of law?
Held that:- It is not in dispute that, for assessing the tax liability of the petitioner, a pre-assessment notice ought to have been issued to the petitioner, by the respondents. Thereafter, an assessment order ought to have been passed, after giving an opportunity of hearing to the petitioner, including the permitting of the petitioner to raise its objections. Without following the said procedures, the collection of the alleged tax due from the petitioner by the respondents, cannot be held to be valid in the eye of law. In such circumstances, the respondents should refund the tax amounts, collected by the respondents, from the petitioner, as prayed for by the petitioner, in the present writ petition, within a period of six weeks from the date of receipt of a copy of this order. Accordingly, the writ petition stands allowed.
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2011 (2) TMI 1313
Whether the petitioner by virtue of being a registered dealer under section 7 of the CST Act is entitled to be supplied with declaration form C as provided under section 8 of the CST Act read with rule 12(1) and rule 12(6) of the CST (Registration and Turnover) Rules and rule 6 of the CST (Orissa) Rules?
Whether the opposite party-department authorities are justified in refusing C form to the petitioner?
Held that:- It is the statutory right of a dealer registered under section 7(2) of the CST Act to be supplied with declaration form C to avail of concessional rate of tax against the purchase of goods from outside the State.
In the instant case, we find that the foreign buyer placed purchase order with MSPL Ltd., Karnataka on January 18, 2010, whereas M/s. Saha Brothers, Jharkhand, raised bills in the name of the petitioner on November 4, 2009, November 24, 2009, December 6, 2009, December 27, 2009, January 8, 2010 (annexure 5 series) which is prior to the purchase order placed by the foreign buyer on M/s MSPL Ltd., Karnataka. We further notice from copy of form H in Sl. No. F 176853, at page 93 to the writ petition that M/s. MSPL Ltd., Bangalore has purchased the goods from the petitioner vide cash memo No. 1 dated August 21, 2009. Thus, the claim of the petitioner that its sale to M/s. MSPL Ltd., is in course of export and fall within the ambit of section 5(3) of the CST Act is not tenable.
In view of the above, we do not find any infirmity or illegality in the order passed by opposite party Nos. 2 and 3 under annexures 1 and 6 respectively warranting any interference by this court. Appeal dismissed.
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2011 (2) TMI 1312
Whether the penalty has been rightly imposed upon the petitioner?
Held that:- Keeping in view the language of section 69, and the expressions used for making liable for imposition of penalty and the explanation offered by the petitioner in our considered view, it cannot be held that the petitioner deliberately or dishonestly shown rate of tax to be two per cent in place of four per cent in its return. It is also not a case that the petitioner had recovered the tax at the rate of four per cent and deposited it with the Department at the rate of two per cent.
Having regard to the aforesaid, no case under section 69 of the Act of 1994 for imposition of penalty is made out, as according to us there was no deliberate action on the part of the petitioner, therefore, in the absence of mens rea, the provision of penalty could not have been invoked against the petitioner.Petition is allowed.
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2011 (2) TMI 1311
Whether there was a transfer of the right to use goods, needed a thorough verification on the evidence available with the petitioner. The matter was remanded to the assessing authority to examine, on the basis of the evidence placed by the petitioner, whether there was a transfer of the right to use goods. No final finding of fact has been recorded by the appellate authority. The observations made by him, when examined in the light of his directing the assessing authority to cause a thorough verification in this regard, would negate the petitioner's contention that the appellate authority had finally concluded that there was no transfer of the right to use goods attracting section 4(8) of the Act.
As noted hereinabove in a composite contract, (unlike an indivisible contract), both service tax and VAT can be levied having regard to the respective parameters of "service" and "sale". The service tax assessments are not the subject-matter of challenge in these proceedings. It is also not clear whether the petitioner has paid service tax on the audio-visual equipment rentals. We see no reason, therefore, to direct refund of the service tax paid by them. Suffice to hold that the order now passed by us shall not preclude the petitioner, if they are so entitled, from claiming refund of service tax paid by them in appropriate legal proceedings. The challenge to the impugned assessment order dated April 8, 2010, however, fails
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2011 (2) TMI 1310
Issues involved: Assessment of deemed let out income u/s 23 of the Income Tax Act for self-occupied properties.
Summary:
The appeal was filed by the assessee against the order of the CIT(A)-26, Mumbai for the assessment year 2006-07. The main ground raised was regarding the notional value of a flat under section 23 of the Income Tax Act. The Assessing Officer observed two house properties owned by the assessee and proposed deemed let out income for one of the properties. The assessee contended that both flats were self-occupied and no addition was necessary.
The Assessing Officer disagreed with the assessee's explanation and deemed one flat as let out property. The CIT(A) upheld this decision, considering the location and rental value of the property. However, the ITAT Mumbai set aside the CIT(A)'s order, directing the Assessing Officer to consider the municipal rateable value as the annual letting value (ALV) instead of the estimated value of Rs. 3 lakhs. The appeal by the assessee was allowed, and the order was pronounced in February 2011.
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2011 (2) TMI 1309
Whether subsection (4) of section 34 or sub-section (6) of section 34 of the Uttarakhand Value Added Tax Act, 2005 applies to the case of the revisionist/
Held that:- The facts as stated squarely disclose that there was no dispute at all but the assessee purported to set up a boggy of a dispute by making an unjust claim by the letter dated January 17, 2007. After having had acted in the manner it was obliged to act for a period of roughly two years from the date of publication of the notification in question, the revisionist by purporting to write a letter on January 17, 2007 purported to wriggle out from its admission as regards payablity of tax by it. If such an action on the part of the assessee can be said to be not covered by sub-section (4) of section 34 of the Act, the same would permit the assessee to hoodwink tax law made by the Legislature. The revision application fails and the same is dismissed accordingly.
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2011 (2) TMI 1308
Whether value added tax is different in nature from sales tax?
Whether the requirement of furnishing of sales tax clearance certificate in a tender process would, since after enactment of the Value Added Tax Act, mean VAT clearance certificate or not?
Whether sales tax clearance certificate is, by its very nature, different from VAT clearance certificate?
Whether the requirement of submission of VAT clearance certificate on supply of woollen blankets can be said to be fulfilled on the submission of VAT registration certificate granted under a scheme of composition of the fiscal statute in respect of a works contract?
What is the scope of interference in a writ appeal with an order passed in the writ petition dismissing the appeal where a new plea is wholly barred from being raised in a writ appeal if the plea was not taken in the writ petition?
What is the scope of judicial review in contractual matters?
Held that:- Since the sum of the value added, at each successive stage, is equal to the final value or price of a commodity or service, the sum of tax collected, at the successive stages, will be equivalent to the tax, which would be payable if it were to be charged once on the final value or price of the produce. Section 2(56) of the Assam VAT Act, 2003, defines VAT to mean a tax on sale of any goods, at every point, in the series of sale made by the registered dealer, with the provisions of credit of input tax paid at the points of previous purchase thereof. In short, VAT is nothing, but a modern system of sales tax.
By quoting a rate "exclusive of VAT", the writ petitioner had not only failed to fulfil the terms of the tender notice, but it also goes without saying that since the writ petitioner had itself mentioned its rate as "exclusive of VAT", the rate, quoted by the writ petitioner, shall have to be calculated by taking into account the element of VAT. On taking into account the element of VAT, when the rate, quoted by the writ petitioner, becomes higher than the rate quoted by the appellant, the finding of the learned single judge, that the rate quoted by the writ petitioner was lower than that of the appellant, cannot, but be termed as erroneous and calls for interference therewith.
In the case at hand, considering the fact that the tender notice specifically provided for submission of VAT registration certificate, the same must be treated to be with regard to the item sought to be purchased. We have, therefore, no hesitation in holding that the writ petitioner-respondent No. 1 herein had not fulfilled the condition of submission of VAT registration certificate as was required to be done under the tender notice and, hence, the writ petitioner’s tender was not a valid tender.
As petitioner-respondent No. 1 had not fulfilled the essential conditions of the tender notice, the writ petitioner’s tender was not a valid tender and was rightly rejected by the State respondents/ authorities concerned. Extended logically, it would mean, and we hold, that the learned single judge erred in law in treating the writ petitioner’s tender as a valid tender and also in treating the writ petitioner as a tenderer, who had quoted, for supply of blanket, a rate lower than that of the appellant.
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2011 (2) TMI 1307
Whether, in the facts and circumstances of the case, the Tribunal is correct in fixing the ratio at the rate of 50:50, which is against the accounts produced by the assessee ?
Whether in the facts and circumstances of the case, the Tribunal is right in sustaining the penalty in respect of estimated addition in view of Explanation to section 12(3)(b), which provides for deduction of tax due on the estimated turnover for the purpose of calculating penalty?
Held that:- Part of the order of the Appellate Assistant Commissioner in altering the ratio from 35:65 for other brasswares and domestic utensils to 50:50 cannot be justified, inasmuch as the same was without any legally acceptable material.
As far as the levy of penalty is concerned when the statutory provision providing for imposition of penalty under section 12(3)(b) read along with Explanation (1) does not contemplate levy of penalty, the penalty imposed by the assessing officer and sustained by the appellate authority cannot be sustained. In favour of assessee.
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2011 (2) TMI 1306
Whether a building or part thereto where accommodation is provided for marriage, reception or matters related therewith, would alone be chargeable to luxury tax under section 3C of the Act?
Held that:- In this case too we defer the consideration of the question as to whether the letting out of a building falling within the definition of the terms "marriage hall" in section 2(5B), is a "luxury" meaning services ministering to enjoyment, comfort or pleasure extraordinary to necessities of life, under section 2(4B), attracting the impost under section 3C of the Act.
In the result, the petition is allowed. Proceedings initiated by the respondents culminating in the endorsement, annexure E, impugned are quashed
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2011 (2) TMI 1304
Whether on the facts and in the circumstances of the case the Customs, Excise and Service Tax Appellate Tribunal was justified in only partly following the decision in the case of Bhuwalka Steel Industries Ltd. v. CCE, Chennai [2005 (2) TMI 590 - CESTAT, CHENNAI] by allowing the appeal and setting aside the duty demand?
Held that:- The question is answered accordingly. On the facts and in the circumstances of the case the Customs, Excise and Service Tax Appellate Tribunal was not justified in only partly following the decision in the case of Bhuwalka Steel Industries Ltd. v. CCE, Chennai [supra] by allowing the appeal and setting aside the duty demand without assigning any reasons for not adopting the course of action adopted in the said decision. The impugned order dated 9-4-2009 passed by the Tribunal is quashed and set aside. Central Excise Appeal is restored to the file of the Tribunal. The Tribunal shall decide the same afresh in accordance with law after affording the parties an opportunity of hearing.
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2011 (2) TMI 1303
Disallowance – Whether, Disallowance of pension paid to its retired employees claimed u/s. 37(1) of Act by A.O. justified - AO's objection there-to was that the assessee had already established a pension fund for the purpose, and to which regular contributions were being claimed and allowed u/s. 36(1)(iv) of the Act. - Held that:- the aspect of the commercial expediency (on the parameters as settled by the apex court) has admittedly not been examined by the AO, and which is a perquisite for the allowance of a claim u/s. 37(1), and the onus to exhibit which is only on the assessee. - AO shall afford proper opportunity of hearing to assessee in matter. - matter remanded back.
Lease equalization charges - Held that:- it is not qua depreciation charge, but only purports to allocate the lease rental between the capital recovery and the finance income. Noticing divergent views, it held in favour of the assessee. - following the decision in earlier case of the assessee [2009 (8) TMI 858 - ITAT COCHIN] decided in favor of assessee.
Disallowance – interest attributable to the dividend income - Whether, Disallowance under section 14A could be invoked in absence of r. 8D r/w ss. 14A (2) and 14A(3) of Act - Held that:- Do not see as to how answer could be in negative. If that be so, no disallowance could be made u/s. 14A for assessment years 2002-03 and 2006-07. Section 14A is admittedly declarative of law as it always stood. Apex court in case of Rajasthan Warehousing Corporation vs. CIT [2000 (2) TMI 5 - SUPREME Court] stated that there is nothing to merit an allocation of expenditure qua taxable and tax-free incomes arising out of one, individual business, but that position can no longer be said to obtain in view of section 14A.
Dividend Income - Whether in absence of prescribed, standard method, disallowance of dividend income u/s 14A could obtain – Held that:- assessee has earned dividend income, which does not form part of total income under Act - Assessee tried to justified its stand on basis that tax-free securities yield lower return, which would not be viable on basis of interest-bearing capital - Assessee has not furnished any material to justify investment in shares and units as self-financed - In absence of which consideration of same as being from common pool of funds available with assessee cannot be faulted - Disallowance, as effected, is, thus, justifiable – Decided partly in favour of assessee.
Inclusion of the excess cash with the assessee-bank as on 31.3.2005 - Held that:- the bank has no record or clue as to from whom, or with respect to which transaction/s, the excess cash stands received by it. If the bank could identify the cash bundle/s bearing the excess Rs. note/s’ with a particular transaction/s, it would immediately notify the concerned depositor/payer or even credit his account. As such, it can be safely assumed that if no claim stands lodged qua cash found excess during the year up to its end or even up to the date of the close of the accounts for that year, none would. - Additions confirmed. - Decided against the assessee.
Bad debts - claim u/s. 36(1)(vii) - Held that:- though the assessee may have written off debts as irrecoverable in its accounts for the year at Rs. 2962.88 lakhs, its claim u/s. 36(1)(vii) is only for Rs. 868.97 lakhs, so that the disallowance, if any, could not exceed the same - as there is considerable and unexplained variation between the provision account as drawn in the assessment order and that provided by the assessee pe its Rs. statement of facts’ before the first appellate authority, we only consider it fit to restore the matter back to the file of the AO, who shall also examine the satisfaction of the condition .of section 36(2)(v) - matter remanded back. - Decided in favor of revenue.
Loss on amortisation of premium on purchase of Central Government securities - Held that:- the loss is in accordance with the RBI prudential norms and in pursuance to the regularly followed method of accounting is also not in dispute - claim allowed - Decided against the revenue.
Additions on account of Unclaimed Deposits’ at 279 lakhs - assessee’ case is that there is no cessation of liability with time - Held that:- The matter has both factual and legal dimensions to it. In a given case, it could be that there are no claims, as say, whether an individual depositor dies with no known legal heirs. In such a case, subject to law of escheat, it could be said to represent the assesseebank’s money, assessable as income u/s. 28(i) or, say, where an incorporated entity becomes defunct, with the time limitation for its restoration having expired. However, even here, unless the bank can assume proprietary rights over the same, and for which the relevant provisions of the applicable laws may have to be examined, it cannot be said that it no longer represents a liability of the bank, which must, in order to be so, be satisfied on both factual and legal counts. - Decided against the revenue.
Additions on account of surplus realised by the bank on the sale of gold ornaments pledged with it - Held that:- The doctrine of unjust enrichment, or the question of cessation of liability u/s. 41, would not arise in the facts of the case, and reference thereto is wholly unwarranted. Where is the question of an Rs. unjust’ enrichment, one may ask, when there are no claimants. Had there been so, they would have prevented the sale of gold or, in any case, lodged a claim for the balance surplus. - The decisions by the apex court in the case of Sinclair Murray & Co. (P.) Ltd. v. CIT [1974 (11) TMI 3 - SUPREME Court] and Chowringhee Sales Bureau (P.) Ltd. v. CIT [1972 (10) TMI 4 - SUPREME Court] may be referred to in this regard, wherein the hon’ble court, while holding the amount collected (though held in a separate account) as the assessee’s trade receipt, clarified that it would nonetheless qualify for deduction for the year of payment, even though the assessee followed the mercantile method of accounting. - Decided in favor of revenue.
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2011 (2) TMI 1302
Violation of the provisions of Section 9(l)(f)(i) of Foreign Exchange Regulation Act, 1973 - Imposition of penalty - Delivery of foreign currency to NRI - Held that:- appellants have not disclosed their relationship with the person who donated each of them 25,000/- US Dollars. It is not probable that the total stranger will donate such a huge amount to the appellants. Even at the time of hearing of this review application a similar question was asked to Shri Madhu M. Patel whether he could disclose his relations with the donor, but Shri Madhu M. Patel could not reply the said question. On the other hand, Shri Niranjan J. Shah in his statement had admitted that he were not knowing the appellants. Thus there is a gift of 25,000/- US Dollars each to the four appellants by total strange person and, therefore, it can be safely presumed that present appellants must have paid a sum equivalent to 25,000/- US Dollars to their donee and, therefore, the violation of 9(l)(f(i) is clearly proved - Decided against Appellant.
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2011 (2) TMI 1301
Whether there was inherent lack of jurisdiction in the Arbitrator, thereby nullifying the award?
Held that:- Appeal allowed. In this case it is not in dispute that the contract between the parties contained an arbitration clause (clause 29). The decision of the High Court that the provisions of the 1983 Adhiniyam would apply and sole arbitrator appointed by the designate of the Chief Justice lacked inherent jurisdiction, cannot therefore be sustained. Though the said Arbitration clause provided for reference of disputes to a three member Arbitration Board, the designate chose to appoint a sole arbitrator and that order dated 11.5.2007 attained finality.
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2011 (2) TMI 1300
Violation of the provisions of Section 9(1)(c) - Imposition of Penalty - Held that:- retracted statement cannot be made the sole basis of imposing penalty in the absence of any other independent corroborative evidence. Apart from that, making the admission of liability to third person is not an acknowledgement of debt, the acknowledgement should be in favour of the person who has a right to recover it - admission made by the appellant to the Director of Enforcement will not fall in the category of acknowledgement of debt giving legal and enforceable right to M/s. Tewin Plastics Ltd., UK - penalty imposed by the Adjudicating Authority for violation of provisions of Sections 14(a) and 18(1) against show cause notice no. 2 is solely based on the retracted statement - Therefore, penalty imposed is not sustainable - However, The penalty of Rs. 50,000/-imposed for acknowledging on the date in favour of M/s. Tewin Plastics Ltd., UK is set aside while remaining part of the order is maintainable - Decided partly in favour of appellant.
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2011 (2) TMI 1299
Deletion on account of interest on security deposit made on notional basis - Actual rent received more than the rateable value determined – Held that:- Following Dy. CIT Versus Reclamation Realty India Pvt. Ltd. [2010 (11) TMI 477 - ITAT, MUMBAI] - the rent received by the Assessee was more than the sum for which the property might reasonably be expected to let from year to year, the actual rent received should be the annual value of the property u/s 23(1)(b) of the Act - Notional interest on interest free security deposit/rent received in advance should not be added to the same - The order of the CIT(A) upheld deleting the additions made by the Assessing Officer on account of notional interest on security deposit for computing the annual value of the property – Decided against Revenue.
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2011 (2) TMI 1298
Issues involved:
The judgment involves the challenge to an Adjudication Order u/s 9(1)(a), 9(91)(c), 16(d) of FERA and 16(1)(a) of FER Act, 1973.
Violation of Section 9(1)(a) of FERA:
The appellant challenged the Adjudication Order imposing penalties for various violations. The Adjudicating Authority found some allegations to be true and imposed penalties based on retracted statements without sufficient corroborative evidence.
Violation of Section 9(91)(c) of FERA:
One of the Show Cause Notices alleged unauthorized payments made abroad without RBI permission. The appellant claimed these payments were for rent but later retracted the statement. The Adjudicating Authority relied solely on the retracted statement, contrary to legal principles.
Violation of Section 16(d) of FERA:
Another Show Cause Notice accused the appellant of acknowledging a debt without proper evidence. The only evidence presented was an entry in the appellant's diary, which was deemed insufficient to prove acknowledgment of debt.
Violation of Section 16(1)(a) of FER Act, 1973:
The appellant was charged with receiving payments from a foreign entity without proper authorization. The Adjudicating Authority found the appellant guilty based solely on retracted statements without independent corroborative evidence.
Conclusion:
The Appellate Tribunal found the Adjudication Order unsustainable as it did not adhere to legal principles, especially regarding the reliance on retracted statements without sufficient corroborative evidence. The appeal was allowed, the Impugned Order was set aside, and the penalty amount deposited by the appellant was to be refunded within three months.
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2011 (2) TMI 1297
Issues: Violation of Section 8(1) and 9(1)(a) of FERA, Evidence Relied Upon, Compliance with Administrative Law Principles
In this case, the appellant challenged an order imposing a penalty for violating Section 8(1) and 9(1)(a) of FERA. The appellant allegedly deposited foreign exchange into a bank account without proper authorization. The Adjudicating Authority found the appellant guilty based on certain documents. However, the appellant argued that these documents were not provided during the show cause notice stage, which is a violation of administrative law principles. The appellant contended that the reliance on undisclosed documents was unjust. The appellant highlighted that the Asstt. Director considered evidence from other cases against the appellant, which is not permissible as each case should be decided based on its own evidence. The Tribunal agreed with the appellant, emphasizing that all materials relied upon for imposing a penalty must be provided to the appellant. As the evidence relied upon was not part of the record and not disclosed during the show cause notice, the Tribunal set aside the impugned order, ruling in favor of the appellant.
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2011 (2) TMI 1296
Whether the service rendered by the petitioner in the form of chemical treatment of effluent water for the awarder amounts to sale of goods in the execution of works contract?
Held that:- In both these Revision Petitions, no doubt, a question of law is raised concerning the correctness of the rate of tax applied. This is not mentioned in the Order of Reference as such. This was not argued before us by the learned counsel appearing for the parties. In such circumstances, we answer the Reference by holding that there was indeed a sale of chemical involved in the execution of the works contract, in view of the Judgment of the Apex Court in Xerox Modicorp Ltd. v. State of Karnataka (2005 (8) TMI 359 - SUPREME COURT OF INDIA), as there is delivery of the same to the awarder by virtue of the chemical being poured into the effluent. The Revision Petitions will be posted before the concerned Bench for disposal of the same.
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2011 (2) TMI 1294
Determining ALP for International Transaction u/s 92C - Filter for rejection of comparable companies - Assessee-company is an Indian company and almost the entire share capital of it is owned by International LLC - An addition was made in the present case on account of variation in income as a consequence of the order of TPO u/s 92C(3)
HELD THAT:- Applying the filter for rejection of comparable companies having related party transactions as a percentage of sales more than 15 per cent., we uphold the said filter.
Another filter of rejecting the comparables whose current year financial data is not available, we find that the said filter has been upheld by the DRP by following the decision in CUSTOMER SERVICES INDIA (P.) LTD. VERSUS ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-17(1), NEW DELHI [2009 (3) TMI 637 - ITAT DELHI,therefore, the second filter is also upheld.
Regarding third filter, ratio adopted to filter the comparables is reasonable. However, regarding calculations made while applying this filter with respect to parties in question, as claimed by the assessee that their ratio also falls between 30 to 60 percent, we, therefore, hold that if the wage/sale ratio of the parties, fall within the range of 30 per cent. to 60 per cent., then those parties should be included in the list of comparables to compute the mean margin. We consider it just and proper to restore this issue to the file of the DRP to verify the claim of the assessee.
Selection of Companies as comparables - M/s. Space Computer and Systems Ltd. - As per assessee, TPO has wrongly been excluded simply on the ground that it was the first year of operation of the comparable. DRP will verify such fact and after verifying a specific finding should be recorded in this regard and appropriate relief should be given to the assessee
Infosys Technologies Ltd., Kals Information System Ltd., Visualsoft Tech Ltd. and Wipro Ltd., particularly, Infosys Technologies Ltd. and Wipro Ltd., - They cannot be excluded as the assessee itself has taken those parties as comparables and now the assessee cannot plead their exclusion simply for the reason that their results are going against the assessee.
Cotton Textiles Export Promotion Council and Export Promotion Council for Handicrafts - As per TPO a business enterprise whose basis of existence is profit making, can't be compared to a non-profit organisation. The assessee has not brought any material on record to controvert such findings of fact recorded by the TPO. Hence, the exclusion of such party from the list of comparable is also upheld.
IL & FS Academy for Insurance & Finance - This company is engaged in providing training in the form of insurance and finance. Therefore, the result of such company are also not comparable with the results of the assessee. The AR has not submitted any material to controvert these factual finding recorded by the TPO. We decline to interfere and TPO's calculation is upheld
However, it is held that if such calculation of the assessee falls within +/- 5%. margin benefit, the said issue may be considered by the DRP as the matter is being restored to the Dispute Resolution Panel on the software development segment. The learned Dispute Resolution Panel has not given any specific finding on this issue that whether or not the assessee is entitled for +/- 5%. benefit to the marketing support service segment.
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