Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2019 (11) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (11) TMI 1805 - ITAT KOLKATATP Adjustment - selection of MAM - CUP or TNMM - HELD THAT:- Both the parties agreed that the Tribunal need not adjudicate the issue whether CUP or TNMM is the MAM for determination of ALP for the assessee company’s international transactions in this appeal and that the issue may be let open for adjudication in an appropriate year. Comparable selection - Functional dissimilarity - HELD THAT:- Lucid Software Ltd's main stream of revenue was out of sale of software products in addition as to software development, thus we direct the TPO to exclude this company from the list of comparable companies. Sagarsoft (India) Limited company be excluded from the list of comparable companies for determining ALP, as it is engaged in full software development cycle and has the RPT 56.49% of the operating revenue, when the filter applied by the TPO was 20% of the operating revenue in the case of the assessee. Prelude Sys India Limited be excluded company provides multiple services like custom software development in addition to cloud computing, application services and mobile technology, enterprise application services, QA and testing, BPO and strategic sourcing. The RPT is 87% of the operating revenue as compared to the filter of 20% applied in the case of the assessee company by the TPO. E-infochips Bangalore Ltd be excluded from the list of comparable companies for the reason that this company provides software development and IT enabled services like hardware designing, complete product lifecycle development, application development, enterprise IT consulting. RPT is 37.96% of the operating revenue as compared to the filter of 20% applied by the TPO in the case of the assessee company. Acropetal Technologies Limited company to be excluded from the list of comparable companies for the reason that this company has Employee cost percentage of 11.51% and whereas the filter applied by the TPO was 25% of Employee cost in the case of the assessee company. Axis IT & T Ltd. be excluded from the list of comparable companies for the reason that this company provides software services. The RPT is 43.18% of the operating revenue while a filter of 20% has been applied by the TPO. The TPO wrongly applied the entire revenue of ₹37.16 crores as from software services whereas the fact is that only ₹3.01 crores was from software services and the balance is ₹34.15 crores from engineering design charges. Zylog Systems (India) Ltd company provides broadband services and wireless internet-based communication services as well as enterprise computing, mobile computing. Employee cost filter of 25% is not met as the assessee’s employee cost percentage is only 20.14%, thus be excluded. 8K Miles Software Services Limited company has purchased the entire business of M/s. Mentor Minds Solutions & Services Inc., a US based company and its subsidiary M/s. Mentor Minds Solutions & Services, Canada. This aspect was not considered and adjudicated upon by the DRP. Hence we direct the AO to exclude this company from the list of comparable companies for the purpose of computation of ALP. Akshay Software Technologies Limited company has a positive net worth. It is not a loss making enterprise and has reported profits in two of the previous three years i.e. 2008-09, 2009-10 and 2010-11. This Bench of the Tribunal in the case of Nomura Research Institute Financial Technologies India (P) Ltd. [2018 (10) TMI 1816 - ITAT KOLKATA] has directed the inclusion of this company as a comparable company. Consistent with the view taken therein we direct the AO to include this company as a comparable company. Maveric Systems Limited company is engaged in software development and testing services and it is the only reportable segment. 99% of the operating revenue for the period ending 31.03.2011 was received from software development. Thus we direct the AO to include this company as a comparable company. Thinksoft Global Services Limited company is a software service provider primarily delivering software validation and verification services to the banking and financial services industry worldwide, thus be included. Working capital adjustment - DRP has directed the AO/TPO to provide the benefit of WCA to the assessee -HELD THAT:- It is well settled that such directions are binding on the TPO. Hence we direct the TPO to implement the DRP directions in this regard. The assessee shall provide the necessary data to the TPO in this regard. In the result this ground of the assessee is allowed for statistical purposes.
|