TaxTMI 
TaxTMI 
2016 (7) TMI 1332
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....of the engineering design services provided by the Appellant and in not providing an appropriate adjustment towards the risk differential. 4. That the CIT (Appeals) erred in not considering the revised set of comparables submitted by the Appellant which are more closely comparable to the functional profile of the Appellant. 5.That the CIT (Appeals) erred in not providing an opportunity of being heard before arriving at a conclusion on the functional profile of the Appellant and consequently while determining the transfer pricing adjustment. 6.That the CIT (Appeals) erred in not applying multiple year/ prior year data for comparable companies while determining arm's length price. 7. That the CIT (Appeals) erred in upholding the approach adopted by the Transfer Pricing Officer of collecting selective information of the companies by exercising power granted to him under section 133(6) of the Income Tax Act, 1961 ('Act') that was not available to the Appellant in the public domain. 8. That the CIT (Appeals) erred in upholding the Transfer Pricing Officer's approach of using data as at the time of assessment proceedings, instead of that available as on the date....
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....n of 5% from the Arm's Length Price(ALP) under the proviso to section 92C(2) of the Income Tax Act. For these and other grounds that may be urged at the time of hearing, it is prayed that the order of the CIT(A) in so far as it relates to the above grounds may be reversed and that of the Assessing officer may be restored. The appellant craves leave to add, alter, amend and/or delete any of the grounds mentioned above. 4. The grounds raised in the cross objection of the assessee are as under; "1. That the contention in the appeal filed by the revenue is bad in law while stating that the case laws relied upon by the ld. CIT(A) while deciding the issue of recomputation u/s 10A are not applicable on the grounds that the revenue has not accepted those orders and has filed appeals before the Hon'ble Supreme Court as following the decision of the jurisdictional High Court is mandatory. 2. That the contention of the revenue is bad in law and adjustments in arm's length price of the international transactions are not based on correct facts and established principles of law and procedures in this regard. 3. That the respondent craves leave to add to and/or to alter, amend, res....
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....val submissions. First we take up Corporate Tax issue i.e. the issue regarding allowability of deduction u/s 10A of the IT Act. The AO has excluded expenses incurred in foreign currency towards travel, freight, telecommunication and insurance charges from the export turnover but not from the total turnover. As per the judgment of the Hon'ble Karnataka High Court rendered in the case of M/s Tata Elxsi Ltd. (Supra), it was held that total turnover is sum total of export turnover and domestic turnover. Therefore, if an amount is excluded from export turnover then the total turnover goes down by the same amount, as a consequence. Respectfully following this judgment of the Hon'ble Karnataka High Court, we decline to interfere with the order of the ld. CIT(A) on this issue and ground no.2 & 3 of the revenue's appeal are rejected and the grounds raised in the C.O. by the assessee are allowed. 10. Now we decide the TP issue i.e. regarding the exclusion of various comparables as per the chart submitted by the learned AR of the assessee. First company for which exclusion has been requested is M/s Avani Cimcon Tech. Ltd. Apart from other Tribunal orders, reliance has been placed on the Trib....
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....r which exclusion is being requested by the assessee is M/s Flextronics Software Systems Ltd.,(Seg.). For exclusion of this company, reliance has been placed on the judgment of the Hon'ble Telangana & Andhra Pradesh High Court rendered in the case of DE Shaw India Software Pvt. Ltd., in ITTA No.433 of 2014, copy of which is available on pages 212 & 213 of Case law compendium. He also submitted that the Tribunal order in that case is in ITA No.2071/Hyd/2011 and copy of the same is available on pages 226 of case law compendium and since this Tribunal order in that case has been approved by the Hon'ble Telangana & Andhra Pradesh High Court, in the present case also, this company should be excluded from the list of final comparables. 13. We have considered the rival submissions. We find that in the case of DE Shaw India Pvt. Ltd.,(Supra), it was held by the Tribunal that M/s Flextronics Software Systems Ltd.,(Seg.) cannot be considered as a comparable because this company is into product development. The Tribunal in that case has followed another Tribunal order rendered in the case of M/s Intoto Software India Pvt. Ltd., and the ld. DR of the revenue could not pint out any difference ....
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....was held that this company should be excluded from the list of final comparables. Since ld. DR of the revenue could not point out any difference in facts in both these cases, we direct the AO/TPO to exclude this company i.e. M/s Kals Information Systems Ltd(Supra) from the list of final comparables. 18. The next company for which exclusion is being requested is M/s Lucid Software Ltd. and for this purpose, reliance has been placed on the same Tribunal order rendered in the case of DE Shaw India Pvt. Ltd., (Supra). The relevant portion is available on page no.230 of case law compendium. Since in that case, the Tribunal held that this company i.e. M/s Lucid Software Ltd., (Supra) should be excluded from the list of comparable and the ld. DR of the revenue could not point out any difference in facts, we direct the AO/TPO in the present case also to exclude this company i.e. M/s Lucid Software Ltd., from the list of comparables. 19. The next company for which the exclusion is requested is M/s Megasoft Ltd., and in this regard, reliance has been placed on the Tribunal order rendered in the case of M/s Trilogy E-Business Software India Pvt. Ltd.,(Supra) and it was pointed out that the ....