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2020 (3) TMI 548 - HC - Income TaxTP Adjustment - comparable selection - functional dissimilarity - HELD THAT:- Persistent systems Ltd. comparable is functionally dissimilar and in the absence of segmental details of revenue generated from its services of product development and product design services has been rightly excluded by the ITAT. Wipro Technology Services comparable excluded has a turnover which is 24 times that of the assessee and has also the benefit of the brand name of Wipro and the assured revenue from its agreement with Citi Technology Services.Thus, the comparable has been rightly excluded. Zylog System Ltd. exclusion of the comparable on the ground that the intangible assets owned by it are significant as compared to the assessee and it has also restructured its business is completely justified both in facts and in law. Accentia Technologies Ltd. comparable amalgamation has resulted in a higher OP by TC is an aberration and thus, the tribunal has rightly excluded the said comparable. Fortune Infotech has unique web based software and provided niche services to its customers and thus, was dissimilar to the assessee and has been right excluded as a comparable. Infosys brand definitely results in higher profits and hence the ITAT has rightly excluded the same from the list of comparables. TCS E Serve International Ltd. dissimilarity to the assessee and thus, the exclusion of the above comparable cannot be faulted in any manner. TCS E Serve Ltd. comparable is functionally dissimilar and thus, has to be excluded. Benchmarking analysis by aggregating the IT and ITES segment of the Appellant - ITAT setting aside the matter for carrying out the benchmarking analysis by selecting the comparable companies involved in provision of both ITES and IT services - HELD THAT:- Keeping in view the fact that the Transfer Pricing Officer had in the preceding years accepted that the assessee was engaged in IT Services (i.e. including software development and ITES) as is evident from the assessment order and considering the fact that due to paucity of time, the assessee could not produce evidence before the ITAT. ITAT is directed to examine the issue whether the assessee is engaged in the activity of software development after considering the additional evidence placed before this Court namely Annexures A-6 to A-13 and any other evidence which may be produced after hearing both the parties and allowing sufficient opportunity to the revenue to verify the same.
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