TaxTMI 
TaxTMI 
2020 (1) TMI 1623
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....y the AO on account of Sales Tax exemptions in the facts and circumstances of the case. 5. Heard both parties and perused the materials available on record. The assessee claimed exemption of Rs.33,45,80,074/- on account of Sales Tax and Purchase Tax subsidy and treated the same as capital receipt. The AO held the same as revenue in nature. The CIT(A) in its impugned order at para No. 2.1.4 held the same is capital receipt, by taking support from the order of this Tribunal in assessee‟s own case for A.Ys. 2006-07, 2007-08 and 2008-09. We find the order of this Tribunal in assessee‟s own case for A.Y. 2009-10 held that the receipt on account of Sales Tax and Purchase Tax is capital in nature which is at page No. 45 of the paper book. As discussed above, the CIT(A) while adjudicating the issue placed reliance on the order of this Tribunal in assessee‟s own case for A.Ys. 2006-07, 2007-08 and 2008-09 held that the assessee is entitled to claim exemption on account of Sales Tax and Purchase Tax, therefore, we find no infirmity in the order of CIT(A) and it is justified. Thus, ground Nos. 1 to 6 raised by the Revenue are dismissed. 6. Ground No. 7 raised by the Revenu....
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....arnings being less than 75%. The year of activity of 8K Miles Software under consideration is the first year of its operations and it earned abnormal profitability in the said year under consideration. The CIT(A) considering the submissions of assessee held the 8K Miles Software cannot be comparable and also fails the basic filter of minimum 75% export revenue. We note that the assessee is 100% export company and the particulars of exports of 8K Miles Software services is only Rs.58,500/- which is 1% of its turnover as it is evident from the small compilation in the which the balance sheet of 8K Miles Software is placed. Further, we note that the 8K Miles Software commenced its activities from F.Y. 2010-11 (A.Y. 2011-12) where it is observed that it has shown 42.23% profits, which is in our opinion, abnormal profitable trend in the first year of its activities. The CIT(A) placed reliance on the orders of ITAT, Pune in the case of PTC Software (India) Pvt. Ltd., QLogic India Pvt. Ltd., Cummins Turbo Technologies Ltd. held the companies having abnormal profitability trend cannot be included in the final set of comparables. Therefore, we find no infirmity in the order of CIT(A) in exc....
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....d in software development cannot be a comparable company for benchmarking the ALP. Further, we find bifurcation of income of e-infochip Ltd. is at page No. 488 of the paper book wherein it is bifurcated revenue from software development and revenue from sale of products which support the argument of ld. AR that the activity and functions of e-infochip Ltd. is different from assessee‟s activities and its functions. Therefore, we hold that the e-infochip Ltd. cannot be a comparable company. Therefore, we find no infirmity in the order of CIT(A) and it is justified in excluding e-infochip Ltd. from the final set of comparable companies. 14. Regarding outsourced back office support services. 15. Heard both parties and perused the material available on record. The assessee in order to benchmark the international transactions in respect of outsourced back office support services identified 14 comparables at mean margin of 14.16% and worked out Profit Level Indicator (PLI) at 17.57%. The AO amongst 14 comparables accepted only four i.e. Informed Technologies India Ltd., Infosys BPO Ltd., Jindal Intellicom Pvt. Ltd. and e4e Health Care Business Solutions and added five more compara....
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....BPO. Further, the Eclerex Services Ltd. underwent extraordinary financial events during the year due to merger and therefore, taking into consideration the findings of this Tribunal in the case of Macom Technology Solutions (India) Private Limited (supra), we hold that Eclerex Services Ltd. cannot be a comparable company be that of assessee. Therefore, the order of CIT(A) is justified in excluding the Eclerex Services Ltd. from the final set of comparables. 18. Ground Nos. 10 and 11 raised by the Revenue questioning the exclusion of Asian Business Exhibition & Conferences Limited being functionally different in the segment of support services. 19. Heard both parties and perused the material available on record. The assessee in order to benchmark international transactions in respect of service segment preferred five comparables which earned mean margin at 12.42% and worked out PLI at 15.04%. The TPO, out of five comparables accepted only four and rejected IDC (India) Ltd. as there was no data provided by the assessee. Further, the TPO added three companies that are Asian Business Exhibition & Conferences Limited, Airtravel Enterprise and ICC International Agencies Limited and pro....
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....ch segment in proportion to segmental turnover to total turnover. 21. The facts of this ground are that the TPO included certain companies on segmental basis in the list of comparables in the Software Development Services segment as well as the other segments of the assessee. For example, under the Software Development Services segment, the TPO considered R Systems International Ltd., Kals Information Technology Systems Ltd., and Acropetal Technologies Ltd. on segmental basis. However, while calculating the operating profits of the relevant segments of these companies, the TPO did not take into consideration their unallocated expenses. The DRP directed the AO "to allocate unallocable expenses to all segments in proportion to segmental turnover to total turnover and thereafter compute margins". The Revenue is aggrieved by such direction. 22. Having heard both the sides, we notice that certain companies included by the TPO in the final list of comparables under all the segments of the assessee, including Software Development Segment, have been taken on segmental level. Common unallocated operating expenses of such companies were not taken into consideration in determining their r....
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.... are dismissed. 25. In the result, the appeal of Revenue is dismissed. 26. Now, we shall take up the appeal of assessee in ITA No. 2775/PUN/2016 for A.Y. 2011-12. 27. The assessee has raised ground Nos. 1 to 1.7 involving the sole issue challenging the action of CIT(A) in confirming that the disallowance made u/s. 40(a)(i) of the Act. 28. Heard both parties and perused the material available on record. The ld. AR referred to page No. 97 of the paper book which is an order of this Tribunal in assessee‟s own case for A.Y. 2010-11 and submitted that in the earlier years for A.Ys. 2007-08 and 2008-09 this Tribunal remanded the similar issue to the file of AO for deciding the same afresh in the light of filing of additional evidences by the assessee and prayed to remand the same to the file of AO. On perusal of the same and with the consent of both the parties, we deem it proper to remand the issue raised in ground Nos. 1 to 1.7 to the file of AO for its fresh consideration. The assessee is liberty to file all the evidences in support of its claim. Accordingly, ground Nos. 1 to 1.7 raised by the assessee is allowed for statistical purpose. 29. Ground No. 2 is general in natur....