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2022 (12) TMI 377 - AT - Income TaxTP Adjustment - Functional dissimilarity - comparability of the entity ‘Thirdware Solutions Ltd.’ with that of the assessee company, which is purely in nature of software development service provider - HELD THAT:- In the absence of segmental results, a company which is engaged into dealing with software products as well as providing software services cannot be compared with a company which is engaged in software development services. Therefore, we direct the Assessing Officer/TPO to exclude this company, ‘Thirdware Solutions Ltd.’ from the list of the comparables. Addition u/s 40(a)(ia) - payment made for purchase of license in respect of which claim of depreciation was made - tax was not deducted at source - HELD THAT:- We find the issue in the present ground of appeal is squarely covered in favour of the assessee by the decision of PCIT vs. Tally Solutions (P.) Ltd[2020 (12) TMI 1160 - KARNATAKA HIGH COURT] wherein it was held that the provisions of section 40(a)(ia) are not applicable in the case of claim for allowance of depreciation, which is a statutory deduction available to the assessee. Thus we hold that the Assessing Officer is not justified in invoking the provisions of section 40(a)(ia) in respect of the payment made for purchase of software license in respect of which claim of depreciation was made. Accordingly, this ground of appeal no.2 stands allowed. Short credit for TDS - HELD THAT:- We restore this issue to the file of the Assessing Officer with direction to allow the credit for TDS made by MSEDCL on the interest income after due verification of Form 26AS and subject the provisions of section 199 of the Act. Thus, this ground of appeal no.3 stands allowed for statistical purposes.
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