TaxTMI 
TaxTMI 
2015 (11) TMI 1579
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....der section 144C of the Income-tax Act, 1961 ('the Act' in short). 02. Appeal of the Revenue is taken up first for disposal. Revenue has altogether taken six grounds out of which, grounds 1, 5 and 6 are general needing no specific adjudication. 03. Vide grounds 2 and 3, grievance raised by the Revenue is that DRP directed exclusion of expenditure deducted from export turnover, from total turnover also 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 ....
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....ly 4.3% of its total revenues and its R &D expenditure was only 1.26% of its revenues. Relying on the decision of Mumbai Bench of the Tribunal in the case of Capgemini India Pvt. Ltd v. ACIT [(2014) 147 ITD 330], Ld. DR submitted that size of the company had no relevance and there was no correlation between sales volume and profits in software development services. According to him, DRP had simply relied on the annual report of Infosys Ltd, while direction its exclusion without closely verifying the reasons why TPO had rejected the contentions of the assessee. 06. Per contra, Ld. AR supported the order of the DRP. Reliance was also placed on the decision of Hyderabad bench of this Tribunal in the case of Pegasystems Worldwide India P. Ltd ....
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....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 the assessee. As per the Ld. DR, DRP had erroneously held that ....
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....available in public domain or was not obtained by the TPO from the said company, invoking the powers vested on him. In such a situation the DRP, in our opinion, was justified in directing exclusion of ICRA Techno Analytics Ltd from the list of comparables. 11. Ld. DR assailing the order of DRP for exclusion of Kals Information Systems Ltd, submitted that Kals Information Systems Ltd was a software development services company not a software product development company. As per the ld. DR though the assessee had stated that Kals Information Systems Ltd was a full-fledged product development company, the data which was relied on by the assessee for coming to such conclusion was not available in the annual report. As per the Ld. DR, the said c....
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....s that Assessee has been using its readymade libraries for sales. This company was rejected in earlier year on functional analysis by ITAT in the case of Planet Online Pvt. Ltd., in ITA No. 464/Hyd/2014 where in it was held that company is engaged in development of software products. Since its annual report states the same facts in this assessment year also, we are of the opinion that the company cannot be selected as a comparable as it was engaged in development of software and software products. Accordingly, Assessee's objections are accepted and AO is directed to exclude the company. Accordingly we are of the opinion that DRP was correct in directing exclusion of the said company from the list of comparables. 15. Assailing the directi....
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....nt 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 ....