TMI Blog2018 (6) TMI 1648X X X X Extracts X X X X X X X X Extracts X X X X ..... . S. Sujatha JJ. For the Appellants : Aravind K. V., Advocate, JUDGMENT DR. VINEET KOTHARI J. - 1. The appellants-Revenue have filed this appeal raising purported substantial questions of law arising from the order of the learned Income-tax Appellate Tribunal, Bangalore Bench B , annexure D dated October 19, 2016 in IT(TP)A. No. 1514/Bang/2010 for the assessment year 2006-07. 2. The Revenue has suggested four substantial questions of law, which are quoted below for ready reference : 1. Whether in the facts and circumstances of the case, the Tribunal is right in law in directing the Assessing Officer to recalculate the deduction allowable to the assessee under section 10A of the Act by reducing the total turnover also by the same amount by which export turnover was reduced by the Assessing Officer in respect of foreign currency expenses incurred towards technical services rendered outside India, without appreciating the fact that there is no provision in section 10A that such expenses should be reduced from the total turnover also, as clause (iv) of Explanation 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. CIT [2015] 127 DTR 327 (Karn) decided on October 20, 2015, which has been affirmed by the hon'ble Supreme Court in the case of CIT v. HCL Technologies Ltd. [2018] 404 ITR 719 (SC) ; [2018] 93 taxmann.com 33 (SC). The relevant portion of the judgment of this court in the case of Tata Elxsi (supra), is quoted below for ready reference : 20. From the aforesaid provisions, it is clear that if an assessee wants to claim the benefit of section 10A, firstly he must export articles or things or computer software. Secondly, the said export may be done directly by him or through other exporter after fulfilling the conditions mentioned therein. Thirdly, such an export should yield for eign exchange which should be brought into the country. If all these three conditions are fulfilled, then the object of enacting section 10A is fulfilled and the assessee would be entitled to the benefit of exemption from payment of Income-tax on the profits and gains derived by the undertaking from the export. 21. Clause 6.11 of Exim Policy dealing with entitlement for supplies from the DTA states that supplies from the DTA to EOU/EHTP/STP/ BTP units will be regarded as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en the following findings, the relevant portion of which is quoted below for ready reference : 9 Infosys Technologies Ltd. 9.1 This company was selected as a comparable by the Transfer Pricing Officer in spite of the assessee's objections to its inclusion as a comparable on the grounds of its scale of operations and brand attributable profit margins. The Transfer Pricing Officer, however, brushed aside the assessee's objections on the ground that turnover and brand aspects were not materially relevant in the software development ser vices segment. 9.2 Before us, the learned authorised representative contended that this company ought to be omitted from the list of comparables as it is not functionally comparable to the assessee since it commands substantial brand value, owns intellectual property rights (IPRs) and is a market leader in software development activities, whereas the assessee in the case on hand is merely a provider of software services to its associated enterprises and does not possess any brand value or own any intangibles or intellectual property rights. In support of this proposition, the learned authorised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are Solutions Pvt. Ltd. (supra) 10.3 Per contra, the learned Departmental representative supported the Transfer Pricing Officer's action in including this company in the final list of comparables. 10.4.1 We have heard both parties and perused and carefully considered the material on record, including the judicial decision relied on by the assessee. We find that the Co-ordinate Bench of this Tribunal in the case of 3DPLM Software Solutions Pvt. Ltd. (supra) for the assessment year 2008-09 has held that this company is to be omitted from the list of comparables as it was into development of software products and hence not comparable to a provider of software services ; observing as under at para 10.4 of the order : . . . 10.4.2. Following the above decision of the Co-ordinate Bench of this Tribunal in the case of 3DPLM Software Solutions Pvt. Ltd. (supra) for the assessment year 2008-09, we direct the Assessing Officer to omit this company from the list of comparables in the case on hand. 12. Persistent Systems Ltd. 12.1 This company was selected as a comparable by the Transfer Pricing Officer ov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... td. (Seg) 15.1. This company was a comparable selected by the Transfer Pricing Officer in spite of the assessee's objections to its inclusion in the set of comparables on the ground that it is a product company which has significant Research Development activity, intellectual property rights, etc. and is therefore functionally dissimilar from the assessee who is a provider of software development services. The Transfer Pricing Officer, however, rejected the contentions put forth by the assessee and included this company in the set of comparables on the ground that he has taken only the software development and services segment for comparability purposes. 15.2. Before us, it was submitted that this company is not functionally comparable to the assessee as it performs a variety of activities under the software development and services segment, namely, product design, innovation design engineering and visual computing labs, as is reflected in the annual report of the company and therefore it is not purely a provider of software development services like the assessee. The learned authorised representative also submitted that the Co-ordinate Bench o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one, etc.), if based on relevant facts, such substantial questions of law could be raised before the High Court under section 260A of the Act, the courts could have embarked upon such exercise of framing and answering such substantial question of law. On the other hand, the appeals of the present tenor as to whether the comparables have been rightly picked up or not, Filters for arriving at the correct list of comparables have been rightly applied or not, do not in our considered opinion, give rise to any substantial question of law. We are therefore of the considered opinion that the present appeals filed by the Revenue do not give rise to any substantial question of law and the suggested substantial questions of law do not meet the requirements of section 260A of the Act and thus the appeals filed by the Revenue are found to be devoid of merit and the same are liable to be dismissed. We make it clear that the same yardsticks and parameters will have to be applied, even if such appeals are filed by the assessees, because, there may be cases where the Tribunal giving its own reasons and findings has found certain comparables to be good comparables ..... X X X X Extracts X X X X X X X X Extracts X X X X
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