TaxTMI 
TaxTMI 
2015 (11) TMI 1579
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....so while computing eligible deduction u/s.10A of the Act. We find that CIT (A) had relied on the decision of jurisdictional High Court in the case of CIT v. Tata Elxsi Ltd (349 ITR 98), wherein it was held unequivocally by their Lordships that items excluded from export turnover had to be excluded from the total turnover also while working out the eligible deduction. Since the CIT (A) had followed the judgment of jurisdictional High Court, just for a reason that an SLP has been filed before the Supreme Court, we cannot deviate from the view taken by the CIT (A). Accordingly we dismiss grounds 2 and 3 of the Revenue. 04. Vide its ground 4, grievance raised by the Revenue is that DRP directed exclusion of M/s. Infosys Ltd, M/s. ICRA Techno Analytics Ltd, M/s. Kals Information Systems Ltd and M/s. Persistent Systems Ltd from the list of comparables considered by the TPO for analysing the pricing of the international transactions of the assessee with its Associated Enterprises (AE). 05. Ld. DR submitted that assessee was providing contract software development services to its principal at USA, called Ikanos Communications Inc. USA and Ikanos Technology Ltd, Cayman Island. As per ....
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....of Infosys Technologies Ltd., from the list of comparables by DRP. We have already considered the opinion of DRP which is consistent not only in Assessee's case but also in the case of M/s. Sumtotal Systems India Pvt. Ltd., (supra), extracted above while considering the exclusion of L&T Infotech Ltd. Since DRP's decision is consistent with the stand taken by the Revenue in other cases and also by the ITAT in a number of cases on reason of turnover, brand equity, functional dissimilarity, we are of the opinion that DRP is correct in excluding the above company from the list of comparables. Therefore, there is no merit in the Revenue's ground and the same is rejected. Accordingly we are of the opinion that DRP was justified in directing exclusion of Infosys Ltd from the list of comparables. 08. Assailing the direction of the DRP directing exclusion of ICRA Techno Analytics Ltd, , Ld. DR pointed out that assessee had cited functional incompatability for excluding this company before the TPO. As per the Ld. DR, Directors' report of the said company mentioned that it was providing technology solutions and the services rendered done by it were not different from that of....
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....tware development services to other parties. According to him, conclusion of the DRP that it was into product development and not providing software development services was incorrect. 12. Per contra, Ld. AR supported the directions of the DRP. 13. We have perused the orders and heard the rival contentions. In the annual report for F. Y. 2009-19 of Kals Information Systems Ltd, background of the said company has been mentioned as under : 14. Said company was having significant inventory coming to 27% of its current assets. Inventory held by Kals Information Systems Ltd came to Rs. 60,47,977/-. We also find that Hyderabad bench in the case of Pegasystems Worldwide India P. Ltd (supra) had held as under at para 10.1 of its order vis-à-vis the comparability of M/s. Kals Information Systems Ltd : 10.1. Assessee's main objection before us is on functionality of the comparable company. As seen from the annual report of 2008-09 and 2009-10 and comparative statement placed by Assessee, the company classified itself as 'the company engaged in development of software and software products since its inception'. The company consisting of STPI unit engaged in developmen....
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....mpany was engaged in outsourced product development services and not into software development services. Annual report of Persistent Systems and Solutions, states as under : It is also mentioned that they were providing out-sourced product development services and significant portion of its revenue was from export of software services as well as products. In the P & L account for the year ending 31.03.2010, revenue from sale of software services and products came to Rs. 5,044.13 millions. There was no segmentation of the results into software services and software product development. Thus segmental results were not available and the assessee has also shown that M/s. Persistent Systems & Solutions Ltd, was developing products like paxpro, ChemLMS, VieMOR, CLAP, e2GMigrator, TLALOC, eMee. In such a situation we are of the opinion Ld. DRP rightly directed exclusion of Persistent Systems and Solutions Ltd from the list of comparables. DRP has also given a finding that assessee was rendering contract software development services to its principal abroad and such services were provided by it through projects and assignments contracted to it by their principals abroad. Thus, according....