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2021 (3) TMI 877
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....#39;ble High Court of Karnataka in the case of Tata Elxsi Limited in (2012) 349 ITR 98 (Kar), without appreciating the fact that there is no provision in Section 10A that such expenses should be reduced from the 'total turnover' also, as clause (iv) of the Explanation 2 to Section 10A provides that such expenses are to be reduced only from the 'export turnover'. (ii) The Ld. CIT(A) erred in not appreciating the fact that the jurisdictional High Court's decision in the case of Tata Elxsi Limited (2012) 349 ITR 98 (Kar) has not been accepted by the department and an appeal has been filed before the Hon'ble Supreme Court, hence not reached finality. ALP Adjustment: (3) SWD Segment: (a) M/s. Infosys Technologies Limited: (I) In the facts and circumstances of the case, the Ld. CIT(A) erred in holding that M/s. Infosys Technologies Ltd., cannot be taken as comparable, being functionally different, when it satisfies all the qualitative and quantitative filters applied by the TPO. (ii) The Ld. CIT(A) erred in fact and in law in demanding comparability standards that may itself defeat the purpose of law relating t....
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....and law in disregarding the position of law that there could be difference between the enterprises compared under the TNMM method that are not likely to materially affect the price or cost charged or the profits accruing to such enterprises. 5. For these and such other grounds that may be urged at the time of hearing, it is humbly prayed that the order of the Ld. CIT(A) be reversed and that of the Assessing Officer be restored. 6. The appellant craves leave to add, to alter, to amend or delete any of the grounds that may be urged at the time of hearing of appeal." CO 91/B/2017 "1. That the order passed by the learned Commissioner of Income Tax (Appeals) - I, Bangalore ['learned CIT(A)], to the extent prejudicial to the Respondent, is bad in law and liable to be quashed. Transfer Pricing 2. That on the facts and circumstances of the case, the learned CIT(A) erred in not providing any specific direction and upholding the approach of the Additional Commissioner of Income-tax, Transfer Pricing -I ("learned TPO") in rejecting the Transfer Pricing ('TP') documentation maintained by the Respondent on invoking provisions of sub-section ....
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....e Respondent. 9. That the learned CIT(A) erred in not providing any direction to the contentions of the Respondent, thereby upholding the learned TPO's approach of including ICRA Techno Analytics in the final list of comparable companies even though it is engaged in providing IT solutions, engineering and business process outsourcing services which is functionally not comparable to the Respondent. 10. That the learned CIT(A) erred in not providing any direction to the contentions of the Respondent, thereby upholding the learned TPO's approach of including Persistent Systems Limited in the final list of comparable companies even though it is engaged in product development and has made various acquisitions during the relevant year which is functionally not comparable to the Respondent. 11. That the learned CIT(A) erred in not providing any direction to the contentions of the Respondent, thereby upholding the learned TPO's approach of excluding Akshay Software Technologies Limited and CAT Technologies Limited from the final list of comparable companies even though the details of related party transaction were available in the financial statements....
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.... granted. Corporate Tax 20. That the decision of the learned CIT(A) is appropriate in directing the AO to exclude expenses incurred in foreign currency towards travel and communication from the export turnover and total turnover for the purpose of computation of deduction under section 10A by following the decision of Hon'ble High Court of Karnataka in the case of Tata Elxsi Limited in (2012) 349 ITR 98 (Kar). 21. That the Respondent craves leave to add to and/or to alter, amend, rescind, modify the grounds herein above or produce further documents before or at the time of hearing of this Appeal." Brief facts of the case are as under 2. Assessee is a company and filed its return of income for year under consideration on 27/09/2010 declaring total income of Rs. 1,98,654/-. Assessee is also claimed deduction under section 10A amounting to Rs. 11,04,58,970/-. The return was processed under section 143(1) of the Act and subsequently the case was selected for scrutiny. Notices under section 143 (2) and 142 (1) were issued in response to which representative of assessee appeared from time to time and submitted details as called for. 3. The Ld. AO o....
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....s Ltd 12% 5. L G S Global Ltd 23% 6. Larsen & Toubro Infotech Ltd 22% 7. Mindtree Ltd 22% 8. P S I Data Systems Ltd 5% 9. Polaris Software Lab Ltd n% 10. Reliance Infosolutions Pvt Ltd 1% 11. Sasken Communication Technologies Ltd* 13% 12. Synetairos Technologies Ltd 21% 13. Thinksoft Global Services Ltd* 18% 14. Zensar Obt Technologies Ltd 19% 15. Crazy Infotech Ltd. 1% 16. Teledata Marine Solutions Ltd 3% Mean 13% ITES service segment 1. Markup on Total Cost Services Without Adis % A 0 K In-I louse BPO Services Ltd 13%- 2. Aditya Birla Minacs Worldwide Ltd 8% 3. Cameo Corporate Services Ltd 10% 4. Cosmic Global Ltd 34% 5. Delta Services (I) Pvt Ltd 7% 6. Informed Technologies India Ltd .12% 7. Infosys B P 0 Ltd 24% 8. K N M Services Pvt Ltd 14% 9. Optimus Global Services Ltd -2% 10. Sparsh B P 0 Services Ltd 6% 11. Crossdomain Solutions Pvt Ltd 28% 12. Omega Healthcare Management services 9%. 13. B N R Udyog Ltd 38% 14. In....
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.... 43.06% 2 ACROPETAL TECHNOLOGIES LTD (SEG.) 22.27% E-CLERX SERVICES LTD 55.97% 4 FORTUNE INFOTECH LTD 22.80% 5 ICRA ONLINE LTD(SEG) 43.39% 6 INFORMED TECHNOLOGIES INDIA LTD 26.15% 7 IN FOSYS BP° 31.23% 8 COSMIC GLOBAL LTD 14.97% 9 SUN DARAM BUSINESS SERVICES LTD -12 . 31% 10 J EEVAN SCIENTIFIC TECHNOLOGY LTD.(SEG.) 21.05% AVERAGE 26.86% 10. The Ld. TPO thus proposed the adjustment being shortfall under both these segment as under: SWD 10,753,719 ITES 33,781,889 Total Adjustment u/s. 92CA 44,535,608 11. On receipt of the Transfer Pricing order, the Ld. AO passed the assessment order under section 143 (3) read with section 92CA of the Act on 05/03/2014. While passing the assessment order the Ld. AO recalculated the deduction under section 10A of the Act at Rs. 10,79,79,913/- as against Rs. 11,04,58,970/- claimed by assessee, by reducing the expenses in foreign currency and communication charges from the export turnover. 12. Aggrieved by the order passed by Ld. AO, assessee p....
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....that does not assume any price risk in case of development. Based on the above, we shall undertake the comparability analysis of the comparables sought for inclusion by revenue. 15. Ground No. 3-4 15.1. Revenue is aggrieved by the exclusion of Infosys Technologies Ltd., Kals Information Systems Ltd. and Tata Elxsi Ltd., from the final list of comparable under software development service segment. Under ITES segment Eclerx services Ltd. and Infosys BPO Ltd. were directed to be excluded. 15.2. The Ld. CIT DR placed reliance on orders passed by authorities below. 15.3. At the outset, the Ld. AR submitted that these comparables does not qualify to be included for the reason that they are functionally not similar with that of assessee as it owns huge brand values as well as high intangibles which is not the case in the present assessee. It is also submitted that this comparables are to be excluded for not qualifying the turnover filter as all these comparables have high turnover of more than 200 crores. 15.4. The Ld. AR placed reliance on the decision of coordinate bench of this Tribunal in case of DCIT vs Northern operating services reported in (2019) 108 taxmann.com ....
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....e Bench should continue to be followed. Since arguments were advanced on the correctness of the decisions rendered by the ITAT Mumbai and Bangalore Benches taking a view contrary to that taken in the case of Genisys Integrating Systems (I) (P.) Ltd. (supra), we proceed to examine the said issue also. On this issue, the first aspect which we notice is that the decision rendered in the case of Genisys Integrating Systems (I) (P.) Ltd. (supra) was the earliest decision rendered on the issue of comparability of companies on the basis of turnover in Transfer Pricing cases. The decision was rendered as early as 5.8.2011. The decisions rendered by the ITAT Mumbai Benches cited by the learned DR before us in the case of Willis Processing Services (supra) and Capegemini India (P.) Ltd. (supra) are to be regarded as per incuriam as these decisions ignore a binding co-ordinate bench decision. In this regard the decisions referred to by the learned counsel for the Assessee supports the plea of the learned counsel for the Assessee. The decisions rendered in the case of NTT Data (supra), Societe Generale Global Solutions (supra) and LSI Technologies (supra) were rendered later in point of time. ....