TaxTMI 
TaxTMI 
2026 (2) TMI 796
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....is bad in law, contrary to the facts and circumstances of the case and liable to be quashed. Transfer Pricing Related 2. The learned AO/DRP erred on facts and in law in not appreciating the fact that the Appellant had prepared the Transfer Pricing ("TP') documentation bona fide and in good faith in compliance with the Income- tax Act, 1961 ('the Act) and Income-tax Rules, 1962 ('the Rules) and in upholding the rejection of the TP documentation by the learned Additional Commissioner of Income-tax (Transfer Pricing) -III, Bangalore (TPO). 3. The learned AO/DRP erred in law and on facts in (i) disregarding application of multiple year/ prior year data as used by the Appellant in the TP documentation, that was available as on the date of preparing the TP documentation and (i) holding that only current year (i.e. financial year 2009-10) data for comparable companies should be used. 4. The learned AO/DRP erred on facts and in law in upholding the act of the learned TPO in relation to Information Technology enabled Services ('ITeS'): (a) in conducting a fresh benchmarking analysis using current year data and substituting the....
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.... g) That the learned Assessing Officer erred in holding that continuance of tax holiday under section 10A is only restricted to a case of amalgamation or a demerger. h) That the learned AO and the learned Panel has not appreciated the fact that for UB Plaza Unit, the first year of claim for deduction under section 10A of the Act by TRISPL post acquisition of business was AY 2006-07 and the said deduction was duly allowed to the Company for the said year. i) That the learned Assessing Officer and the learned DRP erred in not relying on Circular No. 1, dated January 17, 2013 which has clarified that slump sale would not result into any splitting or reconstruction of existing business and the claim for deduction under section 10A of the Act cannot be denied on a mere ground of change in ownership. 7. a) That on the facts and circumstances of the case, the learned AO and the learned Panel erred in denying deduction under section 10A of the Act in respect of Titanium STPI Unit. b) That the learned AO and the learned Panel failed to appreciate that Titanium unit is a newly established undertaking and has received STPI approval and hence is eli....
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....st the order of the Hon'ble Supreme Court in the case of CIT us Smifs Securities Ltd (348 ITR 302)(SC), the claim was made during the course of assessment proceedings. 10. a) That on the facts and circumstances of the case, the learned AO erred in denying the claim for depreciation on software purchases on account of non-deduction of tax at source under section 40(a)(i) / 40(a)(ia) of the Act. b) That the learned AO failed to appreciate that the provisions of section 40(a)(i) / 40(a)(ia) of the Act are applicable only in respect of outgoing expenditure and such provision cannot be stretched to deny the claim for depreciation. c) That the learned Panel has passed the directions on this ground on an incorrect understanding of the fact. d) That the learned AO failed to appreciate that the learned Panel in the Appellant's own case during AY 2009-10 held that the provisions of section 40(a)(ia) is not applicable to depreciation expenditure. e) Without prejudice to the above, the learned AO is not justified in holding that the payment made for the purchase of software is towards the use of copyrighted article and not for use of copyrig....
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....led to deduct the tax at source on them. 3. The DRP erred in not appreciating the fact that the payment towards purchase of computer software is treated as Royalty in accordance with explanation 2 to clause (vi) of subsection (1) of Section 9 of the Act and the disallowance under provisions of section 40(a)(i)/ 40(a)(ia) are attracted if TDS is not made in accordance with the provisions of section 194J/ 195 of the Act. 4. The DRP erred in not appreciating the fact that the disallowance u/s 40(a)(i)/ 40(a)(ia) of the Act is called for even if the claim is made under the head depreciation u/s 32 of the Act as Section 40 reads as "notwithstanding anything contrary in sections 30 to 38, the following amounts shall not be deducted in computing the income chargeable under the head "business and profession". 5. The appellant craves leave to add, to alter or to delete any of the grounds that may be urged at the time of hearing of the appeal." 2. Brief facts of the case are as under :- Assessee is a company engaged in providing information technology enabled services to its associated enterprises. For the year under consideration, assessee filed its return o....
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....oted that, assessee benchmarked the transactions of providing information technology enabled services (ITeS) to its AE by using Transactional Net Margin Method (TNMM) by selecting following 15 comparables :- S. No. Name of the Company Average PLI (%) 1 A O K In-House B P O 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 O Ltd. 24% 8 K N M Services Pvt. Ltd. 14% 9 Optimus Global Services Ltd. -2% 10 Sparsh B P O Services Ltd. 6% 11 Crossdomain Solutions Pvt. Ltd. 28% 12 Omega Healthcare Management Services Pvt. Ltd. 9% 13 BN R Udyog Ltd. 38% 14 In House Productions Ltd. 4% 15 Timex Group India Ltd. 8% Mean 14% Median 10% Upper Quartile 19% Lower Quartile 7% As the comparables had mean margin of 14%, the assessee treated the ITeS segment to be at arms length. In respect of SWD Segment, the assessee earned 15% margins by adopting OP/OC as PLI under TNM....
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....isallowance made by Ld.AO. Upon receipt of the DRP directions, Ld.AO, passed the impugned order by computing total income in the hands of assessee at Rs. 165,29,29,413/-. Aggrieved by the order of Ld.AO, assessee as well as revenue are in appeal before this Tribunal. 6. It is submitted that in the revenue's appeal in ITA No. 234/Bang/2015, the Ld.DR is seeking inclusion of the four comparables that were excluded by the DRP. 6.1. In respect of the assessee's appeal, assessee is seeking exclusion of two comparables in the ITeS segment being e-Clerk Services Ltd. and Infosys BPO Ltd .. Assessee also raised issue of non-granting of risk adjustment which has been submitted to be not pressed in the chart filed before this Tribunal. 6.1.1. In respect of corporate tax disallowance made by the Ld.AO, assessee is seeking relief in respect of denial of deduction u/s 10A in respect of UB Plaza Software, Titanium STPI Unit, Reuters India Pvt. Ltd .. 6.1.2. Assessee has also raised an issue against the denial of claim of depreciation on goodwill u/s 32 of the Act in respect of undertaking that was acquired from slum sale. 6.1.3. The Ld.AR submitted that, in Ground No. 1....
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....obal News Update Team (GNU) for India, Pakistan, Sri Lanka and Canada. ii. Document Indexing and Scanning: As the name suggests, this function receives the documents from the Data Acquisition division. The documents are indexed, scanned and made available on the product Global Access(tm) and made available to the end user. The documents are scanned to preserve the original, especially those that are in a multi-lingual format. iii. Document Sourcing: This function sources financial documents for Production and keeps track of all documents that are expected at different times of the year. The regular source of documents is the Securities and Exchange Commission (SEC), Free EDGAR.com and Global Access(tm). iv. Depository. This function involves setting in place navigational guides (tags) on all SEC Edgar filings to enable client's access to the relevant information that they need at the earliest. The navigational tags are merely headings indicating the content of that portion of the document. The moment a client clicks on the heading it navigates to that relevant content portion. b) Company Fundamentals The fundamentals group serves the....
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....ed to the wrong insider. iii. Institutional Ownership (Portfolio Processing): The department deals with portfolios of mutual funds, Unit Trusts & Pension Funds and arrives at the price for each holding. iv. Fund Research: The team sends out standard and generic questionnaire to various Brokerage Firms and Fund Managers and data collected thereon is incorporated into a product called 'Weisenberger'. The data basically pertains to the financial position of the fund. v. Profiles: The team updates the profile of the fund managers and portfolio managers of the various funds. The same is required as investors tend to inquire about the background of such managers before investing in the funds. A quality team undertakes to crosscheck and verify the updated information. The Research Content Set comprises of the following sub-groups. i. IB Acquire: Key data with reference to the origin, type of reports, etc. are acquired on the Doctrack tool. This is to enable easy reference to all reports based on the search criteria of the user. ii. XML Processing: Broker reports in the form of PDF documents are zoned for ASCII, XML and Bookmark....
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.... provided to specific clients of Thomson Reuters who would be subscribers to the Thomson suite of products. ii. The data is collected by way of feeds received directly from the London Stock Exchange ('LSE') into the Thomson Reuters editorial server (dedicated feeds). The news team at Thomson India in turn accesses the editorial server to collect the data. The LSE websites acts as the other source in case of pre-historic data requirement. iii. The team also collect the news wires relating to debt announcements and ratings from Moody's. Bloomberg, Standard & Poor's (S&P) etc. The news team also provides monthly reports on stock exchanges which basically includes NASDAQ and NYSE. iv. Domestic Coverage: A small part of the team undertakes domestic coverage relating to market coverage (stock and futures market), Regulatory (Filings with RBI, SEBI) etc. The team also assists Singapore, Thailand, Philippines, Taiwan, etc., in commodities market coverage. v. Economic Forecasts: The news team comprises of a set of analysts who generate region-wise economic forecasts and also provide specific reports to clients. d) Customer Service....
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....s. Indexing could also extend to providing Custom Information Solutions. It could involve capturing information in relation to their drugs and is meant to be used internally by them. In India, the data capture does not result in direct transmission to the customers, but is populated on the Thomson Reuters databases for onward transmission or access by customers. Patents indexing/coding: Editorial operations concerning patents are meant to capture IP related information. Patent information comes from all over the world. The editorial operations seek to look at the patent information and provide value-add relating to the patent. The patents team analyses patents released by patent organizations of major and minor countries. These are provided to the team through electronic feeds along with abstracts prepared. Based on the analysis, the team identifies of a novel feature what the patent deals with, read the patents and abstract provided, use subject to add classes or tags manually to the patents based on the technology it belongs to. The technologies identified are primarily - Chemicals and sciences, life sciences, engineering etc. The team also performs dee....
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....es. The objective is to provide a one-stop shop for research, estimates and fundamentals. The activities of this group are however restricted to company estimates and comparability analysis. At the outset, the Global Data Management group typically collects data from Research. Brokers also send data for several companies globally. Such data is collected by the team and posted onto a database. Some data arrives via feed or from Research. If data is collected from Research, it is manually extracted. Thereafter, data cleaning takes place, which refers to the process of filtering out data to arrive at comparables (apple-to-apple data points). The next step is to compare the actuals with the estimates of data put out from the various sources such as Research, data feeds and broker reports. Here, the comparison would reveal if the actuals met expectations or 'beat the Street', etc. This is where the aspect of comparability comes into the picture. For instance at times, the actual data can also vary, so that the Bloomberg actual can vary from the Reuters actual and hence it has to be made comparable to the consensus estimates. The output of the consensus....
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....d Atlas Tax applications are all combined in OPT. A first level review of all the processes takes place in India and a second level review occurs in the US. Transaction Tax - Sale and Use Tax is yet another line of activity of the Tax and Accounting Group. The activities performed here are: * Rating process: Files are received as data and that data is run in an application named DOS prompt. * Calculation of the tax is a real time process, with a turnaround time provided. Login Process: One more process performed by the Tax and Accounting Group is called Login Process. Notices are received from various jurisdictions. The Assessment and Account summary provides the tax amount to be paid in each jurisdiction. The jurisdiction sends the notice to Thomson Reuters. Thomson Reuters acts as the intermediary between the taxpayer and the jurisdiction. The Tax and Accounting group login the application, which contains all the details. The application tells the taxpayer as to how much to pay and to which state the tax has to be paid. Client services are protected through a login and password. Thomson Reuters has view access to the database.....
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....than that, the GSSC supports Corporate for Asia. The Singapore Share Services Centre is referred to as the Asia SSC and works closely with Global Shared Services Centres. Regional SSCs are closer to the customer and hence perform customer facing accounting activities. At the time of integration, both Thomson and Reuters followed similar GSSC models and hence the same strategy and approach continued to be adopted after the integration. The Thomson Reuters integration for the SSC took place during the late 2007 - early 2008 timeframe, essentially during Feb- Mar 2008. The most significant change for the Reuters part of the SSC came in later part of 2008, when SAP was rolled out, replacing Oracle. The business process for Reuters therefore changed from Oracle to SAP. 2. Technology - Software development services The functions currently performed under the technology team can be broadly classified under two heads (a) application development and b) technical support to other departments. a) Application Development Application Development in relation to various in-house applications for all locations worldwide under the Thomson Reuter....
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....e development cycle comes to an end once the QA sign off is completed and the project moves into production. At this stage, Thomson Reuters would approve the development and it is ready for release. b) Technical Support Technical support involves providing technical infrastructure to all the departments, application supports, infrastructure, hardware and software support, database maintenance, etc. The typical cycle of services provided by Thomson India includes input of data by analysts in the Data Repositories and transferring of the data through web related services to Group Companies, which are finally provided to the Global Customer's Segment Group for deployment. In this cycle, Thomson India's general Content Technology Group (CTG) and Technology Operations group provides technology support to data analysts and to data repositories. c) Product Support/Management Thomson India product management team supports management of products relating to the following segments of Thomson Reuters - Investment Banking, Investment Management, Institutional Equities and Retail Wealth management. The product managers in Thomson Ind....
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....cution and implementation (based on agreed and approved projects) The processes are common across MIS centres (India is a mirror site). There are specifically people focused teams for carrying out the aforesaid activities. The projects are assigned for execution by the US team and there could be sub-assignment by the India team to smaller workgroups. In summary. this group is essentially responsible for evaluating processes and building applications to bridge the gap. ii. IT infrastructure The group provides services to both Markets & Professional segments. The IT infrastructure group provides IT support for internal user and for the data centers located worldwide. Internal Service Group: The services provided by the internal services group are in-house and includes support on LAN facilities, desktop help, e-mail, printer etc. Data Centre: Provides remote infrastructure support across worldwide. The services are provided for all disciplines- Unix, Windows, application support, storage etc. Training is provided to the people for any new projects. The team works closely with other groups; esp. the Technology group to provide the n....
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....business and are accordingly more important. An understanding of the assets employed and owned by Thomson India provides an insight into the resources deployed by Thomson India and their contribution to the business processes/economic activities of Thomson India. 4.3.1 Tangibles owned by Thomson India The following routine tangibles are owned by Thomson India as at March 31, 2010: Table 2: Assets Owned By Thomson India as on March 31, 2010 Types of Fixed Assets Gross Block (INR) Leasehold Improvements 300,379,931 Computer Systems 1,388,382,978 Computer Software 229,258,410 Office Equipment 506,144,345 Plant and Machinery 36,595,666 Furniture and Fixtures 75,300,655 Motor Vehicles 8,478,880 Total 2,544,540,865 4.3.2. Intangibles Thomson India does not undertake any Research and Development on its account that leads to the development of non-routine intangibles. Thomson India uses the trademarks, process, know-how, technical data software, operating/ quality standards etc developed/ owned by Thomson Reuters. Thomson India has acquired goodwill resulting due to the transfer of t....
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....ontractual mark up. Thomson Reuters has business dealings with a number of subsidiaries and other companies in different parts of the world with various foreign currencies (USD, GBP. EUR etc.) Hence, it is exposed to foreign exchange risks. 7.1. From the above it is clear that assessee has been categorized as a contract serviced provider under both SWD and IT enabled service who assumes less than normal risk associated with carrying out business in India. 8. Ground No. 4 :- Assessee is seeking exclusion of following two comparables :- A. Eclerx Services Ltd. :- The Ld. AR submitted that, this comparable is functionally different with that of assessee which is clear from page 712 of the annual report placed in the paperbook. The Ld.AR emphasized that this company is known as Knowledge Process Outsourcing company (KPO) providing data analytics to the data management and process improvement solutions to Global Enterprises clients. It is further submitted that, this company provides sales and marketing services to leading global manufacturing, retail, travel and leisure companies. From the audited annual reports placed at page 739, the Ld.AR submitted that it does not ha....
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....supports core and complex activities for its clients using proprietary processes and scalable offshore delivery models. We further find that the company provides clients with a unique blend of consulting services in process outsourcing by combining people, process re-engineering and automation. It is also evident from the perusal of the annual report that the company provides end-to-end support through the trade life-cycle, including trade confirmation, settlements, transaction maintenance, risk analytics and reporting. It is also claimed that over the last year, the company has also invested in developing a buy-side platform to provide end-to-end trading support to asset managers and hedge funds including interfacing with the exchanges, clearing houses, custodians and administrators. Further, the company also provides sales and marketing support services to leading global manufacturing, retail, travel and leisure companies. The company also provides specialist middle office and back office support to the capital market business of leading global banks, on the other hand, the functions performed by the assessee across various teams under the Content Operations have similar function....
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....td., we are of the considered view that both are not functionally comparable. Accordingly, we direct the TPO/AO to exclude Eclerx Services Ltd. while benchmarking the international transaction pertaining to "Provision of ITeS". A.5. Further it is also noted that, this comparable has been categorized as a KPO. It also does not have segmental details in respect of the income earned by it under various heads. Under such circumstances, we do not find this company to be comparable with that of assessee which is a contract service provider to its AEs. Accordingly, we direct the Ld.AO/TPO to exclude Eclerx Services Limited from the final list. B. Infosys BPO Ltd. :- The Ld.AR submitted that this company is a giant company having turnover of Rs. 1126 Crores and is engaged in providing high end integrated services, business process management services to organizations that outsource their business processes. It is submitted that, this company has a high brand value and operates on an economic upscale. The Ld.AR submitted that, this company has incurred significant selling and marketing expenses (including brand promotion expenses). B.1. He placed reliance on page 664 to 670 of the ....
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....26/02/2018, dismissed the appeal filed by the Revenue and upheld the conclusion reached by the coordinate bench of the Tribunal in, inter-alia, excluding Infosys BPO Ltd as a comparable on the basis of its high brand value and consequent higher profitability. The relevant observations of the Hon'ble Delhi High Court, in the aforesaid judgment, are reproduced as follows: - "5. This Court notices that as far as the exclusion of three comparables - M/s. TCS E-Serve Limited; M/s. TCS E-Serve International Limited and M/s. Infosys BPO Ltd. is concerned, the ITAT was cognizant of and took note of the circumstances that these entities had a high brand value and, therefore, were able to command greater profits; besides, they operated on economic upscale. This approach cannot be faulted having regard to the decision of this Court in Pr. Commissioner of Income Tax v. B.C. Management Services Pvt. Ltd. 2018 (89) Taxman.com 68 (Del), which reads as follows: 51. Further, as regards the submission of the learned DR that the assessee is seeking exclusion of its own comparable, as noted in the foregoing paragraphs, there is no estoppel on the taxpayer from pointing out that a....
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....o claim deduction for its profits from export u/s 10A of the Act from AY 2004-05 onwards and the said deduction was claimed by Thomson Business Information (India) Ltd. till the date of transfer of the said unit to the assessee. The Ld.AR submitted that, the said transfer of UB Plaza Unit was by way of slump sale and thereafter assessee continued to claim deduction for the unexpired period from AY 2005-06 onwards. 11.1. The Ld.AR submitted that, Ld.AO allowed the deduction u/s 10A for AY 2006-07 in the hands of the transferor company. Since AY 2007-08, the said deduction was claimed by the assessee holding that, acquisition of UB Plaza Unit by way of slump sale led to non-fulfillment of conditions prescribed u/s 10A of the Act. Ld.AR submitted that, this deduction was denied in the hands of assessee for AY 2007-08 and the issue travelled to this Tribunal. This Tribunal while deciding this issue held that, deduction u/s 10A of the Act cannot be denied to UB Plaza Unit which is otherwise undisputedly an eligible undertaking merely on the basis that it was acquired by assessee under a slump sale. The Ld.AR submitted that, this Tribunal took cognizance of Circular 1 of 2013 issued b....
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....o be conferred thereby on assessees. It is now settled-law that the provisions of an incentive provision have to be construed liberally and that, furthermore in cases where there is an ambiguity in the wording of a section, such a provision would have to be interpreted in such a manner so as to favour of the assessee. 19. Further, as far as section 10A(7A) is concerned that there is nothing in law to suggest that an undertaking which is sold on slump sale basis can be denied the benefit of deduction u/s 10A. In fact, the CBDT, having regard to the true purport and intention behind the said section, has vide its Circular No. 1/2013 dated 17.01.2013, categorically clarified that the claim of deduction under the section cannot be denied purely because of change in ownership due to a slump sale. The assessee placed reliance on the said CBDT Circular. Reliance is also placed on the de decision of the Hon'ble High Court of Bombay in CIT v. Sonata Software Ltd., reported in [2012] 21 taxmann.com 23 (Bombay), as well as the decisions of this Hon'ble Tribunal in Woco Motherson Elastomer Ltd. v. DCIT, reported in [2013] 36 taxmann.com 534 (Delhi - Trib.), and /TO v. Veto Ele....
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....ration also, the revenue denied the claim on identical reasoning. 11.6. Based on the above discussions and respectfully following the view taken by Co-ordinate Bench of this Tribunal for AY 2007-08, having supported by the decision of Hon'ble Bombay High Court in case of Sonata Software (supra), we direct the Ld.AO to allow deduction u/s 10A of the Act to assessee in respect of UB Plaza Unit. Accordingly, Ground No. 6 raised by assessee stands allowed. 12. Ground No. 7 is in against of denial of deduction u/s 10A of Titanium STPI Unit. The Ld.AR at the outset submitted that, assessee had set up new STPI unit, namely, Titanium Unit during AY 2008-09. At the time of assessment proceedings for AY 2008-09, the Ld.AO noted that, it was the first year of claim and assessee had submitted a separate certificate of STPI approval in respect of Titanium Unit. It is submitted that, however the Ld.AO misunderstood the same to be an expansion of UB Plaza Unit whereas the assessee had clarified that the term "expansion" referred to expansion of STPI facility by establishment of a new unit under a separate STPI approval and not an expansion of UB Plaza Unit per se. In the absence of s....
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....hat this unit fulfills all the requirements of section 10A of the I.T. Act, 1961. In this regard, the Id. AR of assessee submitted that on page no. 662 of paper book is a separate certificate issued by STPI in respect of Titanium Unit and the AO has been confused by this mention in the said certificate that this approval is for expansion of STPI facility. He submitted that as per this certificate, it is an expansion of STPI facility by establishing a new unit and not it is an expansion of UB Plaza Unit. Ld. DR of revenue supported the assessment order. 7. We have considered the rival submissions. So we find that regarding Titanium Unit, the AO has proceeded mainly on this basis that this unit is expansion of UB Plaza Unit. But as per the assessee, this is a separate independent unit. We also find that as per para no. 12.5 of assessment order, this is not the only objection of the AO that separate approval from STPI is not made available. The main objection is this that the assessee had not been able to establish that the Titanium Unit is a separate unit by furnishing the asset schedule of this unit. Before us also, such asset schedule of the Titanium Unit has not been furn....
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....uction u/s 10A for Titanium Unit cannot be denied. 12.5. Based on the above reasoning by this Tribunal for assessment year 2008-09, Ld.AR prayed that assessee may be granted deduction u/s 10A since the deduction for UB Plaza unit has not been denied. He also prayed that the doctrine of consistency as well as the principle of ratio descendi applied by this Tribunal for earlier assessment years on materially identical facts requires the deduction to be granted in respect of Titanium Unit for the year under consideration. He also submitted that, claim of deduction for Titanium Unit during the year under consideration is the third year of claim and the rejection of the same would result in violation of principles of consistency established when the deduction is allowed for AY 2011-12 which is the fourth year of claim by the coordinate bench of this Tribunal referred to herein above. 12.6. On the contrary, Ld.DR submitted that, the reasoning adopted by this Tribunal for AY 2008-09 is misplaced, as it does not have any legal legs to stand in the eyes of law. The Ld.DR emphasized that on one hand, the Tribunal for AY 2008-09 rejected the argument of assessee that Titanium Unit is a ....
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....sh adjudication for the year under consideration. 12.9. The Ld.AO shall examine the issue de novo, after affording adequate opportunity of being heard to the assessee, and shall specifically verify and examine, inter alia: * the separate fixed asset register / asset schedule of the Titanium Unit, including date of acquisition and deployment of assets; * the nature of infrastructure, plant and machinery, and whether the same is distinct from or common with the UB Plaza Unit; * the approvals, registrations and permissions (including STPI / SEZ / other regulatory approvals, if any) pertaining specifically to the Titanium Unit; * the date of commencement of operations of the Titanium Unit and whether it falls within the eligible tax holiday period under section 10A; * the separate books of account, cost centre records, and allocation of expenses and revenues, if maintained; * the employee strength and deployment, including whether personnel are separately identifiable 12.10. The Ld.AO shall decide the issue afresh on merits, strictly in accordance with law, without being influenced by the contradictory findings recorded in ear....
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....r allocation of common costs and resources is fair and in line with commercial principles. 12.15. The Ld.AO shall thus examine the claim in a holistic manner, keeping in view that commonality of facilities by itself is not determinative, and that the allowability of deduction under section 10A depends upon the functional integration, genuineness of expansion, and correct computation of eligible profits in accordance with law. 13. Ground No. 8, raised by assessee is against denial of deduction u/s 10A in respect of STPI Unit acquired by assessee from Reuters India Private Ltd., by way of slump sale. The Ld.AR submitted that, assessee took over the business relating to IT enabled services from Reuters India Private Ltd., by way of slump sale as a growing concern. He submitted that, the said business transfer was entered into by way of an agreement dated 09/09/2008 which was effected from 01/04/2008. The Ld.AR emphasised that, revenue has not disputed the claim of deduction u/s 10A in the hands of Reuters India Private Ltd., from AY 2005- 06 onwards on year on year basis. He submitted that, post the transfer of business to assessee, deduction u/s 10A was claimed by assessee for ....
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....ubmitted that, the authorities below rejected the claim of assessee as it did not form part of the return of income. The Ld.AR placed reliance on the decision of the Hon'ble Supreme Court in the case of Goetze (India) Ltd. v. CIT reported in 283 ITR 323 (SC), to support that, this Tribunal has discretion to entertain a fresh claim made by assessee even if such a claim was not made in the return of income or by way of a revised return. 14.1. On the contrary, the Ld.DR submitted that no details in respect of the claim was furnished by assessee and the Ld.AO could not verify the same as it did not form part of the return of income. The Ld.DR thus, supported the orders passed by the authorities below. We have perused the submissions advanced by both the sides in light of the records placed before us. 14.2. It is noted that, assessee raised this claim consequent to the decision of Hon'ble Supreme Court in the case of CIT us Smifs Securities Ltd. (supra). Reliance placed by Ld.AR on the decision of Hon'ble Supreme Court in the case of Goetze (India) Ltd. (supra), supports the submission of assessee regarding the powers of this Tribunal in considering fresh claim rais....
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....puter software is considered for disallowance for non- deduction of TDS on payment made towards such purchases. Since the assessee failed to deduct tax at source as required under section 194J of the Act, the AO disallowed the depreciation under section 40(a)(ia) of the Act. The learned DRP, vide its directions, held that section 40(a)(ia) of the Act is not applicable for disallowing the depreciation claimed on computer software. In conformity with the directions issued by the learned DRP, the AO passed the impugned final assessment order deleting the disallowance made under section 40(a)(ia) of the Act in respect of depreciation claimed by the assesses on computer software. Being aggrieved, the Revenue is in appeal before us. 85. Having considered the submissions of both sides and perused the material available on record, we find that in PCIT v/s Tally Solutions Pvt. Ltd., reported in [2021] 123 taxmann.com 21 (Karn.), The following question of law came up for consideration before the Hon'ble Karnataka High Court: - "Whether, on the facts and in the circumstances of the case, the Tribunal was right in deleting the disallowance made under section 40(a)(ia) in ....
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.... Tax (Appeals) has held that the payment has been made by the assessee for an outright purchase of Intellectual Property Rights and not towards royalty and therefore, the provision of section 40(a)(ia) of the Act is not attracted in respect of a claim for depreciation. The aforesaid finding has rightly been affirmed by the tribunal. The findings recorded by the Commissioner of Income Tax (Appeals) as well as the tribunal cannot be termed as perverse. In view of preceding analysis, the substantial question of law framed by a bench of this court is answered against the revenue and in favour of the assessee." 87. We find that the learned DRP while issuing the directions to the AO to delete the disallowance of depreciation on computer software made under section 40(a)(ia) of the Act, followed the aforesaid decision of the Hon'ble Karnataka High Court. Thus, in the absence of any contradictory decision on this issue being placed on record, we do not find any infirmity in the directions issued by the learned DRP. As a result, the impugned final assessment order on this issue is upheld and Ground No. 4, raised in Revenue's appeal, is dismissed. 15.4. Under the....
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....t comparable challenged by the assessee is Accentia Technologies Ltd. This company was included as comparable by the TPO vide order passed under section 92CA(3) of the Act on the basis it is functionally comparable and satisfies all the filters of the TPO. The learned DRP vide its directions rejected the objections filed by the assessee. Being aggrieved, the assessee has challenged the inclusion of this company as comparable. 47 We have considered the submissions of both sides and perused the material available on record. From the perusal of the annual report of Accentia Technologies Ltd. for the financial year 2008-09, forming part of the paper book from pages 1210-1276, we find that the company is engaged in Healthcare Receivables Cycle Management services and Software Products for Business Process Outsourcing. Under the Healthcare Receivables Cycle Management services, the company provides services, such as medical transcription, medical coding, billing, and receivable management (collection). Thus, it is evident that Accentia Technologies Ltd. develops its own software and renders medical transcription services, while the assessee, as noted in the foregoing paragraph, ....
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....ervices Ltd -12.31% 5. Acropetal Technologies Ltd (Seg) 22.27% 6. ICRA Online Limited (Seg) 43.39% 7. Jeevan Scientific Technology Ltd (Seg) 21.05% Arithmetic Mean 19.50% Less: Working Capital adjustment (0.11%) Computation of +/-5% range as per Proviso to Section 92C(2) of the Act is provided as under: Particulars Amount Operating Revenue from ITeS Segment (A) 6,17,30,84,070 Operating Cost (B) 5,36,78,99,176 Operating Profit (C) = (A) - (B) 80,51,84,894 Operating Margin [OP/TC] (D) = (C)/(B) 15% Maximum cap (5%) (E) = (B)* 105% 6,48,17,38,274 Assessee's margin (Post 5% upper limit) (F) = [(E) -(B)]/((B) *100 Accordingly, 20.75% 13. Accordingly, the Assessee most humbly submits that once the comparables excluded in the Appellant's own case for AY 2007-08 and AY 2009-10 are excluded, the Department's appeal urging to include ICRA Online Limited, Acropetal Technologies Limited and Jeevan Scientific Technologies Limited would not result into any further adjustment and the operating margin of the Assessee of 15% would still be at arm&....
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....ion operates out of its centres at Bangalore, Hyderabad, Mumbai and Chennai. The Technology Division undertakes the software development activity from its centre at Bangalore. The operations of Thomson India are depicted in Figure 6 below: Figure 6: Thomson India - Organizational Set-up Sourcing documents the various production departments: Company Fundamental data updation & analysis of financial Information of, putdely companies in US, Canada, India Pakistan, Sri Lanka. Scandinavian countries and Japan; Processing information relating to Ownership, Research, Estimates, Securities, Entities & Public Filings Content Operations Uretertake development of, enhancement to or local tadoring of existing software Support - Finance & Administration: 14: Textmiology Operations Support services in the areas of finance, human resources and general admin including maintenance of hardware. software & other related services Broadly, Thomson India's activities are divided into two segments - IT enabled services and software development activity. The functions of the various divisions within Thomson India are as described below 1. Content Operations - IT enabled Services....