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2014 (6) TMI 997 - AT - Income TaxTPA - selection of comparable - Held that:- The assessee is engaged in providing software development services only to its AE in USA on cost plus basis. Assessee is registered under the Software Technology Parks of India’s Scheme of Government of India as 100% export oriented unit, thus companies functionally dissimilar with that of assessee or any extraordinary event undertaken need to be deselected from final list of comparable. Allowance of risk adjustment - Held that:- It is a fact that the assessee has raised the issue of risk adjustment before the TPO as well as the DRP. In our considered opinion, this issue may become academic if the assessee’s contention in respect of comparables selected/rejected by TPO is accepted. Therefore, we restore this issue to the file of the AO/TPO for considering afresh if need be, after working out the margin in terms with our directions issued in respect of comparables selected/rejected by the TPO. If, after excluding/including the comparables as per our directions, hereinabove, the assessee’s margin is found to be within Arm’s length, then, issue of risk adjustment may not arise. This ground of the assessee is considered to be allowed for statistical purposes. Excluding communication expenses from the export turnover while computing deduction u/s 10A - Held that:- This issue is squarely covered by the decision of the Hon’ble Bombay High Court in case of CIT Vs. Gemplus Jewellery [2010 (6) TMI 65 - BOMBAY HIGH COURT] and ITO Vs Saksoft Ltd (2009 (3) TMI 243 - ITAT MADRAS-D). Following the ratio laid down in the aforesaid judgments, we direct the AO to exclude the communication expenses from export turnover as well as total turnover while computing deduction u/s 10A of the Act.
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