TaxTMI 
TaxTMI 
TaxTMI 
2019 (7) TMI 1883
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....ndering software development services (SWD Services). Facetime Communications India Pvt. Ltd., (formerly Tumbleweed India Pvt.Ltd., was incorporated on 21.12.2001. It was a wholly owned subsidiary of Tumbleweed communication Corpn., USA. On 9th June, 2004 Tumbleweed Communication Corpn., USA sold its shares to Facetime Communications Inc., USA. Thereafter the Assessee became subsidiary of Facetime Communications Inc., USA. 4. During the previous year, the Assessee provided SWD services to M/s. Tumbleweed Communications Corpn., USA for which the Assessee received a sum of Rs. 1,94,69,571/- and M/s. Facetime Communications Inc., USA also for which the Assessee received a consideration of Rs. 6,36,70,924/-. The dispute in this appeal is only with regard to ALP of sum received from M/s. Facetime Communications Inc., USA. It is not disputed that the assessee rendered SWD services to its associated Enterprises and therefore was an international transactions within the meaning of Sec.92 of the Act and therefore, income arising from the said international transaction has to be determined having regard to arms length price (ALP) as laid down u/s 92 of the Act. An adjustment (higher price w....
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....olution Limited 66.09% 66.10% 15. Geometric Software Solutions Co. Limited 20.34% 18.86% 16. Tata Elxsi Limited (seg) 24.35% 24.00% 17. Flextronics (seg) 32.19% 30.80% Arithmetic Mean 26.59% 24.99% 7. The TPO determined the addition to be made to the total income of the assessee on account of adjustment in ALP at a sum of Rs. 2,66,33,145/-. Against the aforesaid proposal of the TPO, which was incorporated in the fair order of assessment by the AO, the assessee preferred appeal before the CIT(A). The CIT(A) accepted the claim of the assessee for exclusion of certain comparable companies and also for inclusion some of the comparable companies that were excluded by the TPO. Against which the revenue has preferred present appeal before the Tribunal. The assessee has filed cross objection seeking to exclude 2 comparable companies that were not excluded by the CIT(A) viz., Sankhya Infotech Ltd., and Thirdware Solutions Ltd. Thirdware Solutions was excluded by CIT(A) on the ground that its profits were abnormal. The Assessee had pleaded for its exclusion on the basis that this company is functionally not comparable with the Assessee which is a SWD service p....
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....ires the concerned expenses, which are required to be reduced from the export turnoveras per clause (iv) of the Explanation to Section 10A to be reduced from the total turnover also. 10. The Ld. CIT(A) erred in not appreciating the fact that the jurisdictional High Court's decision relied upon by him has not been accepted by the departmental and an appeal has been filed before the Hon'ble Supreme Court 11. For these and such other grounds that may be urged at the time of hearing. it is humbly prayed that the order of the CIT(A) be reversed and that of the Assessing Officer be restored. 12. 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 the appeal." 9. Ground Nos.1, 11 and 12 raised by the revenue are general in nature and calls for no specific adjudication. 10. Ground No.2 raised by the revenue is with regard to the action of the CIT(A) in excluding M/s. Flextronics Software Services Ltd., iGate Global Solution, M/s. Infosys Technologies Ltd., Satyam Computers Services Ltd., and L&T Infotech Ltd., on the ground that the turnover of these companies was above Rs. 200 crores and therefore t....
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....any was excluded. We are of the view that in view of the aforesaid order of the Tribunal, we sustain the order of CIT(A) on the basis that this company needs to be excluded as functionally not comparable. 12. As far as ground No.4 is concerned, it is undisputed that no company was excluded or included by applying the filter of diminishing revenue and therefore this ground of appeal raised by the revenue is purely academic and hence dismissed. 13. As far as ground No.5 raised by the revenue is concerned, M/s. Quintegra Solutions Ltd., had a different accounting year than that of the Assessee and therefore this company ought to have been excluded by the CIT(A) and the learned counsel for the Assessee did not object to its exclusion from the list of comparable companies . Therefore ground No.5 raised by the revenue is allowed. 14. As far as ground No.6 raised by the revenue is concerned, the same relates to exclusion of the following companies Bodhtree Consulting Ltd., Geometric Software Solutions Co. Ltd., and Tata Elxsi Ltd., from the list of comparable companies. These companies were excluded by the CIT(A) on the ground that these companies were functionally different and not co....
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.... the profits derived from export of articles or things or computer software shall be the amount which bears to the profits of the business of the undertaking, the same proportion as the export turnover in respect of such articles or things or computer software bears to the total turnover of the business carried on by the undertaking. Export turnover has been defined under Explanation 2 (iv) to Sec.10A as:- "export turnover" means the consideration in respect of export by the undertaking of articles or things or computer software received in, or brought into, India by the assessee in convertible foreign exchange in accordance with sub-section (3), but does not include freight, telecommunication charges or insurance attributable to the delivery of the articles or things or computer software outside India or expenses, if any, incurred in foreign exchange in providing the technical services outside India." 18. While computing the deduction u/s.10A of the Act, the AO noticed that during the relevant assessment year, the Assessee had incurred telecommunication charges (internet access charges) amounting to Rs. 23,91,701 in respect of STPI unit which was not reduced from the expo....