2025 (8) TMI 1528

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....eal is condoned. 2. The Revenue has filed the present appeal under Section 260A of the Income Tax Act, 1961 [the Act], impugning an order dated 09.12.2024 [impugned order] passed by the learned Income Tax Appellate Tribunal [ITAT]. 3. The impugned order is a common order passed in IT (TP) A No. 593/Bang/2020 in respect of assessment year [AY] 2012-13 as well as IT (TP) A No. 446/Bang/2020 in respect of AY 2012-13. Whereas IT (TP) A No. 593 /Bang/2020 was preferred by the Assessee, IT (TP) A No. 446/Bang /2020 was preferred by the Revenue. The present appeal is confined to the impugned order insofar as it relates to the Revenue's appeal being IT (TP) A No. 446 / Bang / 2020. 4. The Revenue has projected the following questions f....

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....mpanies whose revenues from software development and related services are more than 75% of their operating revenues are selected as comparables. This is an appropriate filter as this is the stage which will determine the correct comparability. In respect of enterprises whose main sources of income is from service segment, the companies whose income from software development / ITeS comes to more than 75% of the operating revenues have been considered for the ALP study as the other segment may not materially affect the financial results of the company." 7. The Assessee had objected to the inclusion of the said two comparables on the ground that the two entities were not comparable on the basis of their FAR profile. The said object....

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....see is that this comparable company fails the service revenue filter of 75% applied by the TPO. It is seen that the TPO has taken the BPO segment of this company. While doing so the filters seem to have been applied at segment level. The filters need to be applied at entity level and not at segment level. That being the considered position, I find merit in assessee's argument with regard to the application of service filter. Total sale of ITeS services: 1,47,40,000 (42.92%) Total revenue: 3,43,43,644 As seen from above, this company fails the filter and hence needs to be excluded. Since the company is to be excluded, other contentions of the assessee become academic and are not considered. Ground allo....