TaxTMI 
TaxTMI 
2016 (9) TMI 1309
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....ed its return of income for the A.Y 2010-11 on 15.10.2010 admitting total income of Rs. 35,89,206 under the normal provisions and an amount of Rs. 76,96,515 u/s 115JB of the Act. During the course of the assessment proceedings u/s 143(3) of the Act, the AO observed that the assessee has entered into international transaction with its AE. He therefore, referred the determination of the ALP of the transaction to the TPO u/s 92CA of the Act. The TPO, vide order dated 24.09.2013, computed the ALP adjustment and accordingly proposed the adjustment of Rs. 3,83,08,894. In accordance with the said order, the draft assessment order was passed against which the assessee preferred its objections before the DRP. The DRP, u/s 144C of the Act, has grante....
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.... "That on the facts and circumstances of the case and in law, the Respondent cross-objects the grounds of appeal filed by the Appellant before Appellate Tribunal for following reasons: i. The Hon'ble DRP/learned AO ought to have rejected companies, namely Infosys Technology Ltd and L&T Infotech Ltd, as they were functionally not comparable. ii. iii. The Hon'ble DRP/learned AO ought to have considered the fact that internet and telephone charges do not form part of the export turnover and thereby should not be reduced from the export turnover". 4. As regards Ground No.2 of the Revenue's appeal is concerned, it is the case of the Revenue that the DRP ought not to have directed exclusion of these two com....
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....nd therefore, was rejected by the TPO in earlier years on this ground. Therefore, the Tribunal has directed the exclusion of L&T InfoTech Ltd also from the final list of comparables in the case of Virtusa India (P) Ltd. For the sake of ready reference, Para 7 to 9 of the said are reproduced hereunder: "7. Coming to the Revenue's appeal against the directions of the DRP to exclude Infosys Technology Ltd., L & T InfoTech Ltd., and Tata Elxsi Ltd., from the final list of comparables, we find that the DRP has directed that these companies to be excluded on the ground of functional dissimilarity. The assessee has relied upon the decision of this Tribunal in assessee's own case for the A.Y. 2007-08 wherein the Tribunal has direct....
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....tion No.1 of the assessee is allowed. 8. As regards Ground No.3, we find that the DRP has directed for exclusion of telecommunication charges and other expenditure both from the export turnover as well as from the total turnover in accordance with the decision of the Special Bench of the Tribunal at Chennai in the case of Income Tax Officer vs. SAK Soft Ltd, reported in 313 ITR 353 (AT). We find that this issue is also covered by the decision of the Hon'ble Karnataka High Court in the case of Tata Elxsi Ltd. 349 ITR 98 (Karn.) and therefore, we see no reason to interfere with the same. The Revenue's Ground of appeal No.2 is therefore, rejected. 9. Cross objection No.2 of the assessee is that the above telecommunication and interne....