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2020 (9) TMI 1282 - AT - Income TaxTP Adjustment - comparable selection - DRP excluded E-Infochips Ltd. on the ground of having service income less than 75% of sales, which is alleged to be contrary to observations of Ld.TPO - HELD THAT - This Tribunal in case of Autodesk India Pvt Ltd. 2018 (12) TMI 1742 - ITAT BANGALORE excluded E- Infochips Ltd., by following view taken by this Tribunal in case of Comscop Network (India) Pvt. Ltd. 2017 (2) TMI 1383 - ITAT BANGALORE wherein, this company was excluded for reason that, there is no segmental information regarding diverse functions performed by this company and that there was major fluctuation in its profits, which influenced turnover of this company. Tribunal consistently in various decisions for A.Y 2011-12 held that, this company does not satisfy service income filter being 75%. We therefore, do not see any reason to set aside this company to Ld.TPO - Ground raised by revenue stands dismissed.
Issues involved:
1. Recalling of Tribunal's order for limited purposes of adjudicating Ground no.7 in IT(TP)A No.39/Bang/2016. 2. Exclusion of E-Infochips Ltd. from the list of comparables based on service revenue filter. Detailed Analysis: 1. The Tribunal recalled its order dated 21/09/2016 for the limited purpose of adjudicating Ground no.7 in IT(TP)A No.39/Bang/2016, as it was observed that the Tribunal had not adjudicated the said ground. The Tribunal deemed it appropriate to recall the decision specifically for this purpose, as per the order dated 26/12/2017 passed in MP No.269/Bang/2017. 2. The issue of excluding E-Infochips Ltd. from the list of comparables based on the service revenue filter was raised in the appeal. The DRP had directed the exclusion of E-Infochips Ltd. due to its service income being less than 75% of sales, which was alleged to be contrary to the observations of the Ld.TPO. The Ld.CIT DR submitted that the revenue earned by E-Infochips Ltd. was actually up to 88% from software development, contradicting the DRP's observation. The Ld.CIT DR argued that the basis for the DRP's decision to exclude E-Infochips Ltd. was not demonstrated and needed reconsideration, relying on the decision of the Ld.TPO. 3. The Ld.AR placed reliance on a decision of a coordinate bench of the Tribunal in a similar case, where E-Infochips Ltd. was excluded for failing in the service income filter. After considering the submissions from both sides and reviewing the records, the Tribunal observed that E-Infochips Ltd. did not satisfy the service income filter of 75% in various decisions for the relevant assessment year. Therefore, the Tribunal directed the Ld. TPO to exclude E-Infochips Ltd. from the list of comparables, dismissing the ground raised by the revenue. In conclusion, the Tribunal's judgment involved the recalling of an order for a specific purpose and the exclusion of a company from the list of comparables based on the service revenue filter, following consistent decisions and precedents set by the Tribunal in similar cases.
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