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2019 (8) TMI 543 - ITAT PUNETP Adjustment - selection of comparable - international transaction of “Provision of Design Engineering Services” - list of comparables at the time of giving effect to the direction of the DRP - HELD THAT:- Referring to functional profile of the assessee a wholly owned subsidiary of AMCC, USA, was established in India to carry on the business of computer software, manufacture/supply of hardware, electronic components and systems, networking and providing advice, consultation and software technology solutions inter alia in relation to embedded operating system etc. companies functionally dissimilar with that of assessee need to be deselected from final list. Acropetal Technologies Ltd. - TPO vide his rectification order excluded Acropetal Technologies Ltd. from the list of comparables. The AO passed the draft order accordingly. The assessee accepted the exclusion of Acropetal Technologies Ltd. but assailed the draft order before the DRP on certain other issues. The DRP gave certain directions but did not direct to include Acropetal Technologies Ltd. in the list of comparables either suo motu or on the request of the assessee. Once the position was so, the exclusion of Acropetal Technologies Ltd. attained finality as the same did not figure in the draft order. The AO/TPO, while giving effect to the directions of the DRP, were devoid of any power to again include Acropetal Technologies Ltd. in the list of comparables for enhancing the amount of transfer pricing adjustment. Having himself excluded Acropetal Technologies Ltd. up to the stage of passing the draft order, the TPO ceased to exercise any jurisdiction to re-examine his earlier view and include it in the list of comparables at the time of giving effect to the direction of the DRP, when it was not a part of the direction. Under such circumstances, we direct to exclude Acropetal Technologies Ltd. from the list of comparables for benchmarking the international transaction of provision of design engineering services. Eclerx Services Ltd. - in the Annual report that this company rendered Financial services; Sales and marketing services; and Cable and telecommunication services. No separate segmental information is available. When we consider the nature of services provided by Eclerx Services Ltd. on entity level in juxtaposition to the services rendered by the assessee, we find that there is a lot of difference. Notwithstanding that, it is still further found from page 10 of the Annual report of this company that there happened certain extraordinary financial events during the year in as much as there was acquisition and integration of Agilyst, a company which was bought at the beginning of the year. The Chairman’s message records that the erstwhile Agilyst is now Eclerx Services Ltd.’s third business - Cable and Telecom Services (CTS). Ergo, it is seen that Eclerx Services Ltd. acquired a new company during the year under consideration which is an extraordinary event. In view of our decision on the exclusion of the two companies from the final set of comparables, we do not propose to deal with other issues relevant to this international transaction. In the ultimate analysis, we set aside the impugned order and remit the matter to the file of AO/TPO for reworking out the ALP of the international transaction of “Provision of Design Engineering Services” afresh in accordance with our above observations and directions. Needless to say, the assessee will be given an adequate opportunity of hearing. Disallowance u/s 43B on account of late deposit of Employees’ contribution to Provident Fund Scheme - assessee late deposited the share of employees’ contribution for a particular month beyond the grace period of 5 days - HELD THAT:- We find that this issue is no more res integra in view of the judgment of the Hon’ble jurisdictional High Court in CIT Vs. Ghatge Patil Transports Ltd. [2014 (10) TMI 402 - BOMBAY HIGH COURT] in which it has been held that both employees’ and employer’s contribution are covered under amendment to section 43B and no disallowance can be made if the payment is made before the due date of filing return u/s.139(1) of the Act. The DRP has recorded on page 65 of its direction that the contribution of ₹ 13,34,813/-, pertaining to the month of July, was actually deposited on 24-08- 2012 as against the due date of 20-08-2012. Respectfully following the precedent, we allow this ground of appeal.
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