TMI Blog2019 (10) TMI 1418X X X X Extracts X X X X X X X X Extracts X X X X ..... s of appeal were pressed for adjudication in the assessee s appeal. Deduction u/s 10A - reducing the travel and telecommunication charges from the export turnover without reducing the same from the total turnover - HELD THAT:- It is not in dispute before us that the Hon ble Karnataka High Court in the case of CIT Vs. Tata Elxsi Ltd. [ 2011 (8) TMI 782 - KARNATAKA HIGH COURT] has held that whatever is excluded from the export turnover should also be excluded from the total turnover while computing deduction under section 10A of the Act. This view of the Hon ble Karnataka High Court has been upheld by the Hon ble Supreme Court in the case of CIT Vs. HCL Technologies Ltd.[ 2018 (5) TMI 357 - SUPREME COURT] . In view of the above, we hold that telecommunication charges should be excluded both from the export turnover as well as from the total turnover and deduction under section 10A computed accordingly. - IT (TP)A No. 979/Bang/2016, IT (TP)A No. 1090/Bang/2016 - - - Dated:- 16-10-2019 - Shri N.V. Vasudevan, Vice President And Shri B. R. Baskaran, Accountant Member For the Assessee : Shri. Chavali Narayan, CA. For the Revenue : Shri. Pradeep Kumar, CIT-DR(ITAT)(Beng ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 377; 224,419.119/- Operating profit on cost (OP/OC) 12% 4. Comparison of the TP study done by the Assessee and TPO: Particulars Assessee TPO Methodology adopted TNMM TNMM Profit Level Indicator (PLI) OP/TC OP/TC Database used PROWESS CAPITALINE PLUS PROWESS CAPITALINE PLUS Comparables selected 21 14 5. Comparable companies ultimately selected by TPO and their arithmetic mean: Sl. No. Comparable Margin (Unadjusted) Margin (adjusted) 1. Infosys Technologies Limited 45.01% 43.88% 2. Larsen Toubro Infotech Limited 19.33% 19.13% 3. LGS Limited 11.95% 7.42% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed appeal before CIT(A) against the addition made in the final assessment order on account of determination of ALP. On appeal by the assessee, the CIT(A) rejected 3 comparables (Tata Elxsi, Infosys Technologies Limited Kals Information System Limited (Seg)) based on functionally different criteria based on the ITAT order for AY 2009-10 in the assessee s own case. The CIT(A) directed the AO/TPO to treat the foreign exchange fluctuation as operating in nature, while computing the operating margin of the Assessee as well as the comparable companies, as it has direct nexus with the business of the assessee. The CIT(A) directed AO/TPO to consider corrected receivable/payable figures for assessee and comparable companies and also directed re-computation of margins for certain comparable companies which were erroneously computed by the TPO. The assessee argued for inclusion of certain companies forming part of TP documentation which was rejected by the CIT(A) on the following reasons: Sl. No. Comparable Reason for rejection by CIT(A) 1. Akshay Software Technologies Limited The CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nies even if selected by the assessee in TP study can be sought to be excluded by the assessee based on functional comparability or other valid reasons. In view of the aforesaid decision of the special Bench, we admit the additional ground for adjudication. 11. The learned Counsel for the assessee however submitted that out of the 3 companies sought to be excluded in the additional grounds of appeal, exclusion of Persistent Systems Ltd., from the list of comparable companies would alone be sufficient. As far as exclusion of Persistent Systems Ltd., is concerned, the learned Counsel for the assessee brought to our notice decision of the ITAT, Bangalore Bench, in the case of Cerner Health Care Solutions Pvt. Ltd., in IT(TP)A No. 44/Bang/2015 for Assessment Year 2010-11 wherein this Tribunal in the case of the assessee, rendering software Development Services such as assessee in this appeal, considered the comparability of Persistent Systems Ltd., and held as follows:- (4) Persistent Systems Ltd. 9. We have heard the Id. DR as well as Id. AR and considered the relevant material on record. The assessee raised objections against selection of this company on the ground that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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