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2021 (3) TMI 1412
Seeking grant of Anticipatory Bail - tampering with the e-Tender - price bid changed to make the lowest bidders - various tenders of different Government Departments were tampered and changed to price bid of specific Applicant Companies due to which, these companies became the lowest bidder and their tender got accepted and thus, these companies got undue benefits - HELD THAT:- A three Judges' Bench of Supreme Court in Sushila Aggarwal and others v.. State (N CT of Delhi) and others [2020 (1) TMI 1193 - SUPREME COURT] while dealing with the purpose, object and function of bail under Section 438 Cr.P.C., observed that Once the investigation makes out a case against him and he is included as an accused in the charge-sheet, the accused has to surrender to the custody of the Court and pray for regular bail. On the strength of an order granting anticipatory bail, an accused against whom charge has been framed, cannot avoid appearing before the trial Court.
Coming to the merits of the case, it is the apprehension of the petitioner that under the guise of summoning him, the 1st respondent is preparing a ground for his arrest. Though the argument of the learned Senior Counsel for the 1st respondent is that such apprehension is baseless, it is significant to note from Para No.13 of the Counter filed by the 1st respondent that the investigation has established that there is a nexus between the petitioner and Mr.Srinivasa Raju Mantena and same needs to be investigated in detail - As per the principles laid down in P.Chidambaram vs Directorate of Enforcement [2019 (9) TMI 286 - SUPREME COURT], in terms of section 45 of the P.M.L. Act, this Court need to arrive at the satisfaction that (i) there are reasonable grounds for believing that the applicant is not guilty of the offence, he/she is charged with; and further that (ii) he/she is not likely to commit any offence while on bail.
The application for anticipatory bail in the case of P.Chidambaram [2019 (9) TMI 286 - SUPREME COURT] was rejected on merits of the allegations and other material. It is trite law that in case of economic ,offences, which are having an impact on the society, the Court must be very slow in exercising the discretion under Section 438 of Cr.P.C. But on perusal of the factual matrix of the present case, prima facie, there is no material to come to the conclusion that the act of the petitioner is having an impact on the financial status of the Country, and in that light the ratio laid down in P.Chidambaram's case is not applicable to the facts of the present case.
This Court is of the considered opinion that the petitioner is entitled for anticipatory bail - Petition allowed.
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2021 (3) TMI 1411
TP adjustment - Comparable selection - functional dissimilarity - HELD THAT:- Celestial Biolabs Ltd, company is into product development. It is also to be noted, though this company is providing various kinds of services and also developing products; however, segmental details of the services provided and products developed are not available in public domain. Considering these aspects, the co-ordinate bench of this Tribunal in case of UCB India Pvt Ltd vs Addl.CIT [2016 (7) TMI 1445 - ITAT MUMBAI] has rejected this company as comparable to a software development service provider. Thus reject this company from being treated as a comparable to the assessee.
E-zest solutions Ltd. provided high-end ITES to its AEs and segmental information regarding various services provided are not available in public domain. Considering the fact that the aforesaid company is engaged in providing high-end ITES or knowledge process outsourcing (KPO) services, it has been rejected as a comparable to a software development service provider in the above referred decisions. Since, the aforesaid decisions cited before us pertain to the very same assessment year and there is no major change in the factual position, following these decisions, we reject this comparable.
Acropatel Technologiies Ltd - TPO in case of the present assessee, while selecting comparable companies, he has applied certain filters, which include Income from software development services more than 75% of the operating revenue and Employee cost to operating revenues more than 25%.
On perusal of the annual report of the company placed in the paper book, the contention of learned Senior Counsel appears to be correct. Further, it is observed, while considering similar objections raised on behalf of the assessee in case of Accenture Services Pvt Ltd [2018 (7) TMI 1877 - ITAT MUMBAI] Tribunal has excluded this company from being treated as comparable as it does not qualify the aforesaid filters. The same view has been re-iterated by the co-ordinate bench in case of Dialogic Networks (India) Pvt Ltd [2018 (7) TMI 1878 - ITAT MUMBAI] Following the aforesaid decisions of the co-ordinate bench, we direct the assessing officer to exclude this company from the list of comparables.
Softsol India Ltd. - In our considered opinion, assessee’s contention that certain adjustments have to be made in computing the margin of this company, requires consideration. In case of Dialogic Networks (India) Pvt Ltd [2018 (7) TMI 1878 - ITAT MUMBA] which is for the very same assessment year, the Tribunal while accepting similar claim made by the assessee, has directed the assessing officer to compute the margin of this company at 15%. Therefore, following the aforesaid decision of the co-ordinate bench, we direct the assessing officer to compute the margin of this company at 15%.
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2021 (3) TMI 1410
Correctness/validity of an order u/s 127 - power of transfer of case - Department proposes to transfer the PANs of the petitioners from Income Tax Officer, NCW 5(2) to Deputy Commissioner of Income Tax/Assistant Commissioner of Income Tax, Central Circle 18, New Delhi - As per petitioner request for the supply of reasons for transfer were never considered - HELD THAT:- The files were thus called for and the reasons have been supplied in a sealed cover. A perusal of the same would indicate that the transfer is to facilitate a proper assessment of all the group entities that were subject to search proceedings and this is in line with Board's Instruction bearing No.8 dated 14.08.2002.
As a matter of policy, the Central Board of Direct Taxes has decided upon centralisation of all search assessments in one charge granting discretion to the concerned Director General of Income Tax (Inv.)/Chief Commissioner of Income-Tax (Central) to deviate from such a decision (not to centralize a search case) on account of work load, low investigation potential or tax impact of any of the entities of the group.
A policy decision such as the above, is in public interest and intended to facilitate proper assessment of search cases, as it is expected that the issues arising from these matters may be intertwined or inter-connected, thus find no reason to interfere in this policy.
As far as post search assessments are concerned, I am given to understand that the assessments will continue to be framed by the Officer to whom charge is entrusted upon centralization. It stands to reason that the central charge is decentralised as soon as possible in order that normalcy may resume.
Reasonable opportunity of being heard in order to effectively show cause against the proposed transfer - It is a settled proposition that in case of transfer, such opportunity has to be extended. However, two distinguishing factors would be that in the case of Vijayasanthi (1990 (11) TMI 139 - ANDHRA PRADESH HIGH COURT] entity in question was not part of the group of entites searched but a standalone assessee whose assessment was proposed to be transferred. The second distinguishing factor is the decision was rendered on 15.11.1990 prior to the issuance of instructions by the Central Board of Direct Taxes in the year 2002. WP dismissed.
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2021 (3) TMI 1409
Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - list of cases including the present case have been settled under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 and discharge Certificate has been issued - HELD THAT:- Since the case has been settled under Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019, the appeal lying pending in this tribunal shall be deemed to have been withdrawn in terms of section 127(6) of Chapter V of Finance (No.2) Act, 2019.
The appeal is disposed of as withdrawn.
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2021 (3) TMI 1408
Withholding obligation u/s 195 from payments made on account of software - whether learned CIT(A) was justified in holding that “no tax is deductible on the payment/credit made by the appellant to SDL for software”? - HELD THAT:- The issue is, however, no longer res integra. In the recent case of Engineering Analysis Centre of Excellence Pvt Ltd [2021 (3) TMI 138 - SUPREME COURT] Hon’ble Supreme Court has finally resolved this issue in favour of the assessee and held that the assessee does not have any tax withholding obligation under section 195 from payments made on account of software.
We uphold the conclusions arrived at by the learned CIT(A) and decline to interfere in the matter.
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2021 (3) TMI 1407
Valuation - inclusion of Royalty Charges paid by the appellant to the foreign company towards the technical know-how, in the transaction value of the final product which is manufactured by the appellant - requirement to be added over and above the transaction value at which the final product is sold by the appellant to unrelated buyers or not - HELD THAT:- There is no difference in the facts and law point involved in the case wherein this Tribunal in FIRMENICH AROMATICS INDIA PRIVATE LIMITED VERSUS COMMISSIONER OF CENTRAL EXCISE & ST, DAMAN [2019 (11) TMI 9 - CESTAT AHMEDABAD] has passed and in the present case the only issue is that whether the Royalty Charges paid by the appellant towards the technical know-how should be added over and above the transaction value at which the goods were sold to unrelated buyers. It is found that the goods are sold to unrelated buyer where the valuation is governed by Section 4 of Central Excise Act, 1944 i.e. transaction value on which duty needs to be discharged. In case of transaction value under Section 4 there is no need to verify that which expenses are included and which are not included therefore, the appellant have discharged the duty on the correct transaction value.
In view of the order of this Tribunal the issue is no more res integra and following said order the demand in the present is not sustainable - appeal allowed.
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2021 (3) TMI 1406
TP Adjustment - arm’s length price towards payment of royalty - HELD THAT:- We find that while deciding identical issue in assessee’s own case in A.Y. 2010-11 [2019 (5) TMI 1719 - ITAT MUMBAI] the co-ordinate bench has restored the issue back to the assessing officer for fresh adjudication with certain directions. Following the aforesaid order, the Tribunal, while deciding identical issue in assessee’s own case in assessment years 2011-12 and 2013-14, [2020 (1) TMI 722 - ITAT MUMBAI] has restored the issue to the assessing officer for fresh adjudication.
Nature of receipt - Industrial promotion subsidy received under the Government of Maharahstra Tech Scheme of Incentives 2007 as a capital receipt - HELD THAT:- As relying on [2020 (1) TMI 722 - ITAT MUMBAI]DRP has made a categorical observation that various evidences were not furnished by the assessee to support its claim, we are of the view that the entire issue relating to assessee's claim of Sales Tax refund / subsidy being a capital receipt requires fresh consideration in the light of various documentary evidences, including, the MoU between the Government of Maharashtra and M&M - assessee is also required to meet the allegation of learned DRP that various documentary evidences were not furnished to support its claim. The assessee is also required to properly explain the impact of the observations made in Annexure-C to the eligibility certificate regarding eligibility of the assessee for payment of IPS. Since, all these aspects have not been considered properly for whatever may be the reason, we are inclined to restore this issue to the file of the Assessing Officer for de novo adjudication after providing reasonable opportunity of being heard to the assessee. The assessee is at liberty to furnish further evidences, if required, to prove its claim. The Assessing Officer must consider not only the evidences filed but also the submissions made by the assessee while deciding the issue.
Thus we restore the issue back to the file of the assessing officer, for fresh adjudication, keeping in view the directions of the Tribunal in the order referred to above and only after due opportunity of being heard to the assessee. This ground is allowed, for statistical purpose.
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2021 (3) TMI 1405
Issuance of lookout circular - attempt to get the petitioner‟s passport impounded - assauging and harrassing the petitioner - allegation of streaming of false content in his news portal - HELD THAT:- Having perused the memorandum dated 31.08.2010 it has come to the forth that reasons for opening LOC have to be given quite categorically. The reason as assigned is pending investigations in four cases. But the police could not file the final report involving the petitioner over such a long time. In these circumstances, in the considered view of this court, the lookout notice circular could not have been issued against the petitioner inasmuch as the petitioner being a citizen of USA did not attempt to leave the territory of India in order to evade the arrest. It appears from the nature of allegations that it is not a case of extortion but an “attempt‟ which may not fall within the serious crime. Moreover, the respondents No.1 and 2 did not produce the case diary to support their case of serious fraud or commission. Since, the petitioner has undertaken before this court to inform the police the moment he would arrive at Agartala and considering his status [vice-President, American Bank], the respondents No.1, 2 and 3 are directed to withdraw the lookout notice within 24 hours from the hour of receiving a copy of this order.
In the present case, no warrant of arrest issued by any court against the petitioner is pending and the petitioner is being represented by his engaged counsel. The notice under Section 41A of the Cr.P.C. was issued at a time when it was physically impossible for the petitioner to travel to India for contagion (Covid-19 lockdown). Hence, his inability to appear before the police cannot be termed as deliberate. So far the question of impounding of the passport is concerned, no case has been made out by the respondents No.1 and 2 in terms of Section 10(3) of the Passport Act. That apart, Passport Act does not authorize the Indian Passport Authority to cancel US Passport.
This court cannot shut its eyes to the right of the petitioner. The action which curtails or takes away the personnel liberty has to be reasonable and proportionate and has to be considered not in the abstract or hypothetical considerations.
The lookout circulars as issued against the petitioner stands quashed. As there is no contemplation of impounding of the passport by way of overstepping the authority, it is directed that without the order of the competent criminal court, the investigating agency shall not venture for taking action for impounding the passport of the petitioner as coercive measure - Petition allowed.
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2021 (3) TMI 1404
Seeking grant of interim anticipatory bail - HELD THAT:- In the event of arrest of the applicant, Rishabh Jain, shall be released on interim anticipatory bail in pursuance of notice dated 05.02.2021 issued by the Director General of GST, Zonal Unit, Gurugram read with Sections 174 and 175 IPC on her furnishing a personal bond of Rs. 50,000/- and two sureties each in the like amount to the satisfaction of the Station House Officer of the police Station/court concerned with the conditions imposed.
The applicant shall make himself available for interrogation by a police office as and when required - The applicant shall not directly or indirectly, make any inducement, threat or promise to any person acquainted with the facts of the case so as to dissuade from disclosing such facts to the Court or to any police office.
Application allowed.
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2021 (3) TMI 1403
TP Adjustment - Comparable selection - HELD THAT:- Companies functionally dissimilar with that of assessee need to be deselected.
Deduction u/s 10AA - reducing the communication expenses and insurance charges from the export turnover while determining the adjusted export turnover for computing the eligible deduction u/s 10AA - HELD THAT:- DRP following the jurisdictional High Court judgment in the case of CIT v. Tata Elxsi Ltd [2011 (8) TMI 782 - KARNATAKA HIGH COURT] directed the AO to reduce the impugned expenses both from the export turnover as well as the total turnover. Further, the judgment of the Hon’ble Karnataka High Court has been upheld by the Hon’ble Supreme Court in the case of CIT v. HCL Technologies Ltd.[2018 (5) TMI 357 - SUPREME COURT].
TDS u/s 195 - disallowance by invoking the provisions of section 40(a)(i) on import of software taxes were deductible at source u/s. 195 - whether the software was purchased for use, the transaction was in the nature of purchase of product and there were no taxes deductible at source - HELD THAT:- This issue is covered by the latest judgment of the Hon’ble Supreme Court in the case of Engineering Analysis Centre of Excellence (P.) Ltd. [2021 (3) TMI 138 - SUPREME COURT] wherein it was held that transaction relating to software are in the nature of sale and not license, no copyright or part of any copyright is licensed to the assessee. The non-resident owner continues to have proprietary rights in the software and use of software by the Indian company is limited to making back-up copy and redistribution. So payment received for sale of computer software is business income. As such, software purchased is in the nature of purchase and sale of product and no TDS is deductible. Accordingly, we allow this ground of appeal by the assessee.
Nature of expenditure - expenditure on purchase of software - HELD THAT:- As software expenditure has to be treated as revenue expenditure. Accordingly there is no question of granting any depreciation and purchase of software has to be allowed as a deduction, though there was no TDS made by the assessee.
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2021 (3) TMI 1402
Settlement Commission to issue formal orders - only text of the order u/s 245D(4) of the Act, 1961 was pending to be issued which has not been done till date - HELD THAT:- The facts stated by the petitioners can only be verified by the Settlement Commission, it may be left at the discretion of the Settlement Commission to take a decision whether such facts are correct or not and accordingly, the Settlement Commission may proceed with the matter. We have also considered the contents of the Finance Bill 2020-21 and the relevant provisions therein but as the said Bill has still not been enacted, the position which stands is to be taken as in the absence of the contents of the said Bill.
Considering the above facts and circumstances, we dispose of this petition with the direction to the respondent No.1- Settlement Commission to consider the facts as stated by the petitioner and as recorded in the above order and if they are found to be correct, it may proceed to pass/issue appropriate formal orders on or before 31.03.2021 and if such facts are not found to be correct, the Commission would be free to proceed in accordance with law in its own wisdom and discretion. Direct service is permitted.
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2021 (3) TMI 1401
TP Adjustment - comparable selection - HELD THAT:- Companies functionally dissimilar with that of assessee SWD service provider and employee cost as more than 25% of the revenue need to be deselected.
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2021 (3) TMI 1400
TP Adjustment - comparable selection - HELD THAT:- Assessee is engaged in the business of providing software development services in the field of leasing, loan accounting and portfolio management solutions, thus companies functionally dissimilar with that of assessee need to be deselected.
As relying on M/S. EMC SOFTWARE AND SERVICES INDIA PRIVATE LIMITED case [2019 (7) TMI 1921 - ITAT CHENNAI] we direct exclusion of Larsen & Toubro Infotech Ltd. and Persistent Systems Ltd. from the list of comparable companies.
Negative working capital while making Transfer Pricing adjustment - HELD THAT:- We notice that the issue relating to negative working capital has been examined by the co-ordinate bench of Tribunal in the case of ACIT vs. M/s e4e Business Solutions India P Ltd [2020 (12) TMI 1255 - ITAT BANGALORE] and it was held that negative working capital adjustment is not required in the case of a captive service provider, since it is fully insulated by its AE against working capital risks.Thus we direct the AO/TPO not to make negative working capital adjustment.
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2021 (3) TMI 1399
Correct head of income - interest received u/s 28 of the Land Acquisition Act, 1894 - part take the character of the compensation and would fall under the head “Capital gains” or “Income from other sources” - HC held that interest received on compensation or enhanced compensation is to be treated as “income from other sources” and not under the head “Capital gains”- HELD THAT:- Special Leave Petition is dismissed.
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2021 (3) TMI 1398
Applicability of provision of section 115JB - provision for bad debt - assessee has not produced details of credit balance of provision of bad debt after set off of bad debt of relevant year - HELD THAT:- As decided in assessee own case [2018 (7) TMI 2295 - ITAT JAIPUR] it is held that this issue is covered in favour of appellant. Therefore, provisions of section 115JB are not applicable in assessee's case and it is not to be subjected to MAT. This ground of appeal is allowed.
DR has not placed on record any new facts and judicial pronouncements, therefore, considering the totality of facts and circumstances of the case as well as respectfully following the orders of the Coordinate Benches of this Tribunal as well as decision of the Hon’ble Jurisdictional High Court, we do not find any reason to interfere or deviate from the findings so recorded by the ld. CIT(A) and we uphold the same. Appeal of the revenue stands dismissed.
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2021 (3) TMI 1397
TP adjustment - arm’s length rate of interest to be charged on the loan advanced to AE - HELD THAT:- It is the case of the assessee that considering the LIBOR/EURIBOR rate of interest and the interest charged by various banks as noted by learned Commissioner (Appeals) in his order, which varied between LIBOR (+) 1.75% to 4%, the interest charged at 3% is at arm’s length. As noted, before Commissioner (Appeals) the assessee has specifically submitted that the LIBOR rate prevailing during the year was 0.53% p.a. The aforesaid factual position has remained uncontroverted before us.
In assessee’s own case for assessment years 2012-13 and 2016-17 the interest charged at 3% on the loan granted to the same AE has been accepted by the TPO. Though, these orders passed by the TPO are for subsequent assessment years; however, they have persuasive value while determining the arm’s length rate of interest, as, there is no material change in the factual position.
We hold that interest charged at 3% on the loan advanced to EM Germany should be considered to be at arm’s length. Hence, there is no need for any adjustment. Accordingly, the addition made is deleted.
Disallowance made u/s 14A r.w.r.8D - As argued before rejecting assessee’s computation of disallowance and invoking rule 8D, the Assessing Officer has not recorded proper satisfaction - HELD THAT:- Legal position is fairly well settled that section 14A(2) of the Act mandates the Assessing Officer to record satisfaction indicating that the disallowance computed by the assessee is incorrect having regard to the books of account maintained by him. This condition has to be satisfied before invoking Rule 8D. In the facts of the present case, though, the assessee in specific terms has provided allocation of various expenditures for earning of exempt income, the Assessing Officer has neither dealt with the assessee’s claim nor has provided any reason as to why the claim of the assessee is not to be accepted in terms of section 14A(2) of the Act. Thus, in our considered opinion, the conditions of section 14A(2) in the present case has not been satisfied. In view of the above, we delete the disallowance.
Assessee appeal is allowed.
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2021 (3) TMI 1396
Reopening of assessment u/s 147 - AO received some information from the Investigation Wing that the assessee had brought back some unaccounted income through shell companies - HELD THAT:- Which were those shell companies has not been mentioned in the reasons recorded. The ld. AR has pointed out that the assessee during the year did not get any profit on the alleged shares held/sold by him. The shares were sold by the assessee at cost price, therefore, there was no question of routing any unaccounted income by way of share profit. A perusal of the reasons recorded reveals that the AO did not correlate the information received by him from the Investigation Wing with the Income-Tax Return/accounts of the assessee. He reopened the assessment on the basis of borrowed satisfaction without verifying about the genuineness of the information received.
Such an information from Investigation Wing may give the AO the reasons to suspect, but the same does not constitute reasons to believe, until and unless the Assessing Officer satisfies himself about veracity of the information received from the Investigation Wing so as to form the belief that the income of the assessee for the year under consideration has escaped assessment. The necessary ingredients of forming belief by the Assessing Officer of escapement of income are missing in this case. Therefore, the reopening of the assessment being bad in law, the assessment order is quashed. The consequential additions made by the Assessing Officer are accordingly ordered to be deleted. Appeal of the assessee stands allowed.
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2021 (3) TMI 1395
Restoration of the name of the company in the register of companies - Section 252 of Companies Act 2013 - HELD THAT:- The contention of the petitioner that the company is entitled to avail the benefit of Ext.P4(b) scheme, since the appeal was filed before the stipulated date, cannot be accepted in view of the provisions contained in the scheme itself which came into force only on or after 15.01.2021. The applicability of the scheme is confined to only those companies, for which restoration was ordered between 01.12.2020 and 31.12.2020. There is nothing in Ext.P4(b) which provides that, mere filing of an appeal would enable the companies to avail the benefit of the scheme, even if the appeal irrespective of the date of disposal of the appeal directing restoration.
There are no merit in the claim of the petitioner - petition dismissed.
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2021 (3) TMI 1394
Reopening of the assessment for the period 1st April, 2006 to 31st March, 2011 - Orissa Entry Tax Act - case reopened due to receipt of objection raised by the A.G., Odisha, Bhubaneswar - HELD THAT:- An order reopening the assessment must reflect the reasons for such reopening in the body of the order itself. The reasons cannot be supplied later. If the reason is simply due to the ‘objection raised by the A.G., Odisha’, it must state what the nature of such objection was. Only then will the assessee be in a position to answer the notice issued effectively. Since this basic principle has not been adhered to, the Court sets aside the impugned order reopening the assessment.
Petition allowed.
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2021 (3) TMI 1393
TP Adjustment - comparable selection - HELD THAT:- Companies functionally dissimilar with that of assessee captive software development service providers need to be deselected as comparable. Turnover more than 200 crores and hence cannot be considered as good comparable companies.
Disallowance u/s 40(a)(ia) - AR submitted that assessee had deducted tax under relevant provisions of the act. It has been also deposited with the government Treasury but same has not been verified - HELD THAT:- We remand this issue to Ld.AO for due verification of the TDS deducted in the light of records and documents filed by assessee. The Ld.AO shall verify the same and grant credit to the TDS against which tax has been deducted and deposited.
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