TMI Blog2016 (3) TMI 1236X X X X Extracts X X X X X X X X Extracts X X X X ..... different financial year, we are of the opinion that the same can not be considered as comparable in the absence of suitable financial data. We direct the same to be excluded from the list of comparables. We also find that this company is not selected as a comparable in the similar cases in this assessment year VAT payments indicating product sales - M/s. VJIL Consulting Ltd. - Held that:- The company can be excluded, as there is no clarity on why the VAT was paid be it in UK or India. The same company was rejected in other similarly placed companies and we do not find any case in which this company is selected as comparable. Consequently, we are of the opinion that this company has to be excluded. Deduction u/s 10A - Held that:- Whatever is excluded from export turnover should also be excluded from total turnover for the purpose of computing deduction u/s. 10A of the Act - IT(TP)A No. 841/Bang/2013, C.O. No. 172/Bang/2015 - - - Dated:- 18-3-2016 - SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI NARENDRA KUMAR CHOUDHURY, JUDICIAL MEMBER For The Revenue : Dr. G. Manoj Kumar, Addl. CIT For The Assessee : Shri Raghunathan, S. Advocate ORDER Per B. Ramak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it without defining what constitutes abnormal profit filter and how the same is determined and thereby also erred in excluding the comparable companies Exensys Software Solutions Ltd and Thirdware Solutions Ltd. 7. The Ld.CIT(A) erred in rejecting the diminishing revenue filter used by the TPO to exclude companies that do not reflect the normal industry trend. 10. The learned CIT(A) erred, in the facts and circumstances of the case in holding that M/s. Tata Elxsi Ltd., cannot be taken as comparable, being functionally different when it satisfies all the qualitative and quantitative filters applied by the TPO. 11. The learned CIT(A) erred, in the facts and circumstances of the case in holding that M/s. Bodhtree Consulting Ltd., cannot be taken as comparable, when the company qualifies all the qualitative and quantitative filters applied by the TPO in selection of this company as a comparable. 12. The learned CIT(A) on the facts and in the circumstances of the case erred in holding that M/s. Geometric Software Solutions Co. Ltd., cannot be taken as comparable, when the company qualifies all the qualitative and quantitative filters applied by the TPO in selecti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s well to neutralize the impact of both low and high turnover companies and to provide a more reliable result. 102. For the foregoing reasons and following the decisions cited above and considering that the appellant s turnover during the year under appeal was less than ₹ 25 Crores, I allow this ground of appeal and direct the AO to apply, for computing the arithmetic mean of net margins, the turnover filter at both the lower and upper ends and exclude from the final set of comparables the following companies falling outside that range of turnover and companies that had abnormally high profits ( 50%): Sl. No. Company Turnover (Rs. Crore) OP/OC (%) 1. Exensys Software Solutions Ltd., 70.68 07.30 2. Flextronics Software Services Ltd., 457.45 32.19 3. IGate Global Solutions Ltd., 406.00 4.32 4. Infosys Technologies Ltd., 6859.70 42.83 5. L T Infotech Ltd., 562.45 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... margin in the relevant FY. This ground of appeal is dismissed . 5.3. Ground No. 6 on abnormal profit was not separately adjudicated and the above comparables contested in ground were excluded on turnover filter. On the basis of Co-ordinate Bench decision, the Ld.CIT(A) has adopted the above filter with which we concur. Even though, the companies Exensys software solutions Ltd and Thirdware solutions Ltd were also excluded on this filter, we find that the companies were otherwise being excluded on functionality as well, in various Co-ordinate Bench decisions for this assessment year. So, the Revenue s contentions are not acceptable. Grounds are accordingly rejected. 5.4. Learned Counsel also placed a chart on record informing that various comparables selected by the TPO were also rejected in Coordinate Bench decisions of: i. Sysarris Software P. Ltd., Vs. DCIT in IT(TP)A No. 1360/Bang/2011 IT(TP)A No. 85/Bang/2012; ii. DCIT Vs. Kodiak Networks India Pvt. Ltd., in IT(TP)A No. 532/Bang/2013 C.O. No. 119/Bang/2015; iii. ADP Pvt. Ltd., Vs. DCIT [62 Taxmann.com 352]; and iv. DCIT Vs. Textron Global Technology Centre (P) Ltd., [56 Taxmann.com 465] The companies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot selected as a comparable in the similar cases in this assessment year. 7. Ground No. 13 is as under: 13. The learned CIT(A) erred in directing inclusion of the M/s. VJIL Consulting Ltd., rejecting the TPO s conclusion that the company does not satisfy the qualitative filters applied for the purpose of comparability analysis and therefore is an inappropriate comparable for the purpose of determining the arm s length price . 7.1. The issue on this ground is with reference to inclusion of the above company, rejecting the TPO s contentions. TPO after finding the company as a comparable has rejected the same in the final list on the basis of VAT payments indicating product sales. It was clarified by assessee before Ld.CIT(A) that the VAT payments were made in UK and not in India. Ld.CIT(A) accepted the same. 7.2. After considering the rival contentions, we are of the opinion that that the company can be excluded, as there is no clarity on why the VAT was paid be it in UK or India. The same company was rejected in other similarly placed companies and we do not find any case in which this company is selected as comparable. Consequently, we are of the opinion that this c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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