9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2024 (5) TMI 792 - AT - Income TaxTP Adjustment - comparable selection - HELD THAT - Eclerx Services Ltd to be excluded to be functionally different. Genesys International Corporation Ltd. - In assessee s own case for assessment year 2008-09 2019 (1) TMI 1901 - ITAT MUMBAI directed to exclude Genesys from the list of comparables on account of functional disparity. Similar view was taken by the Tribunal in assessee s appeal for assessment year 2009-10 for excluding Genesys from the list of comparable. No material to controvert the findings of co-ordinate Bench in the preceding assessment years is brought on record by the Revenue. Thus we direct the AO to exclude Genesys from the list of comparables in the impugned assessment year. Infosys BPO Ltd. - To substantiate the argument of extra ordinary event the assessee placed on record Annual Report of Infosys for Financial Year 2009-10. A perusal of same reveals that Infosys has acquired McCamish Systems LLC USA for a total consideration of Rs. 173 crores and further contingent consideration of Rs. 67 crores. Thus from the above it is evident that there was financial impact on the funds of the company in Financial Year 2009-10 on account of acquisition of another entity. As decided in JP Morgan India (P) Ltd. 2019 (1) TMI 1274 - BOMBAY HIGH COURT has held that events like merger amalgamation etc. in life span of a company is not a normal event hence such company cannot be considered as comparable. Thus on account of extra-ordinary event of amalgamation during the relevant year Infosys BPO Ltd. is directed to be excluded from the list of comparables. Wipro Ltd.- Wirpro had paid Rs. 2385 million relating to previous acquisition. Further from perusal of annual report it emerges that Hon ble Karnata High Court had approved amalgamation of Wipro Networks Pte. Ltd. Singapore and WMNETSERV Limited Cyprus with Wipro w.e.f. 1.4.2009. Thus there were extra ordinary event of amalgamation and merger during the relevant period. As held earlier wherever there are such extra ordinary event in the life cycle of a company in particular/relevant financial year the said company cannot be considered as good comparable. Thus in the aforesaid reasons we hold that Wipro is not a good comparable in the impugned assessment year. Informed Technologies India Ltd - The activities carried by DBOI Global Services (P) Ltd. are in the nature of providing data process and back office support services to its AEs. Thus the said company is also captive service provider. In the light of similar facts we follow the decision of the Coordinate bench and direct the Assessing Officer to exclude Informed Technologies India Ltd. from the list of comparables. Reduce service tax refund from operating expenses - HELD THAT - The assessee has placed reliance on the decisions of Tribunal in the case of AMD India P. Ltd 2019 (12) TMI 400 - ITAT HYDERABAD and Capstone Securities Analysis P. Ltd. 2019 (4) TMI 2156 - ITAT PUNE to contend that service tax refund is operating revenue. The assessee has also furnished a table indicating that even if service tax refund is ignored the variation between the ALP and value of international transaction is less than 5% hence the international transaction would be within tolerance limit. We find that the Tribunal in the cases afore-mentioned has held service tax refund/service tax written back as operating revenue while computing profit level indicator. Considering above decisions of the Tribunal we see no merit in ground no.2 of appeal hence dismissed. Benefit of deduction u/s 10A in respect of interest earned on various fixed deposits - HELD THAT - We find that this issue is recurring. In assessment year 2009-10 2011-12 the assessee had claimed deduction u/s 10A on interest income. AO disallowed the same. The matter travelled to the Tribunal. The co-ordinate bench allowed benefit of deduction under section 10A of the Act in respect of interest income. The facts being identical in the impugned assessment year we uphold the direction of DRP in treating interest income as income from business eligible for deduction under section 10A of the Act. Deduction u/s 10A in respect of foreign exchange gain on EEFC account - HELD THAT - The Coordinate Bench in assessee s appeal 2021 (7) TMI 53 - ITAT MUMBAI allowed the benefit of deduction u/s 10A.
Issues Involved:
1. Transfer Pricing Adjustment 2. Exclusion of Comparable Companies 3. Penalty Proceedings u/s 271(1)(c) 4. Charging of Interest u/s 234B & 234C 5. Deduction of Education Cess 6. Inclusion of Accentia Technologies Ltd. and Acropetal Technologies 7. Service Tax Refund as Operating Revenue 8. Deduction u/s 10A on Interest Income 9. Deduction u/s 10A on Foreign Exchange Gain Summary: 1. Transfer Pricing Adjustment: The assessee contested the Transfer Pricing adjustment made by the TPO, which involved the inclusion of certain comparable companies. The assessee's OP/OC was 9.70%, while the TPO's selected comparables had an average mean of 35.23%, leading to an ALP adjustment of Rs. 130.51 crores. 2. Exclusion of Comparable Companies: The assessee sought the exclusion of Eclerx Services Ltd., Genesys International Corporation Ltd., Infosys BPO Ltd., Wipro Ltd., and Informed Technologies India Ltd. from the list of comparables. - Eclerx Services Ltd.: The Tribunal excluded Eclerx Services Ltd. due to functional disparity, consistent with previous years' decisions. - Genesys International Corporation Ltd.: Excluded for functional disparity, aligning with past Tribunal decisions. - Infosys BPO Ltd.: Excluded due to an extraordinary event (acquisition of McCamish Systems LLC) impacting financial results. - Wipro Ltd.: Excluded due to an extraordinary event of amalgamation and significant difference in functionality and turnover. - Informed Technologies India Ltd.: Excluded due to functional disparity and low employee cost to sales ratio. 3. Penalty Proceedings u/s 271(1)(c): The challenge to penalty proceedings was deemed premature and thus dismissed. 4. Charging of Interest u/s 234B & 234C: The charging of interest under these sections was found to be mandatory and consequential, leading to dismissal of related grounds. 5. Deduction of Education Cess: The additional ground for deduction of 'education cess' was dismissed based on the decision of the Hon'ble Apex Court in JCIT vs. Sesa Goa Ltd. 6. Inclusion of Accentia Technologies Ltd. and Acropetal Technologies: The Revenue's appeal for inclusion of these companies was dismissed, as the Tribunal had previously excluded them due to functional disparity. 7. Service Tax Refund as Operating Revenue: The Tribunal upheld the decision to treat service tax refund as operating revenue, dismissing the Revenue's appeal on this ground. 8. Deduction u/s 10A on Interest Income: The Tribunal upheld the DRP's direction to allow deduction u/s 10A on interest income, consistent with decisions in previous assessment years. 9. Deduction u/s 10A on Foreign Exchange Gain: The Tribunal allowed the deduction on foreign exchange gain, following the precedent set in previous years and the decision of the Hon'ble Karnataka High Court in CIT vs. Motorola India Electronics (P) Ltd. Conclusion: The assessee's appeal was partly allowed, while the Revenue's appeal and the assessee's cross objections were dismissed.
|
