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Showing 221 to 240 of 1494 Records
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2016 (6) TMI 1277
Cash credit - Held that:- With respect to the shareholder the AO made an enquiry and issued them letters to appear in person. However, the shareholders did not personally appeared before the AO. The AO in his order observed that assessee company vide its order dated 26-3-2013 had furnished part details with respect to its shareholders, but none attended in response to summons u/s.131(1). The AO also observed that each shareholders company dispatched its reply in response to summons u/s.131(1), however, they did not bother to attend his office. From the record we found that even though assessee has filed the details asked by the AO in support of the share capital being subscribed by respective shareholders, however, they were not produced before the AO even after asking by the AO, in view of the documentary evidence placed on record and considering the fact that shareholders had not appeared before the AO, we restore the matter back to the file of AO for deciding afresh after considering the evidences filed by the assessee in support of the identity, genuineness and creditworthiness of the shareholders.
Disallowance of purchases - Held that:- No merit for disallowance of entire amount of purchases. Keeping in view the totality of facts and circumstances of the case vis-a-vis rate of net profit shown by the assessee, to cover up leakage of revenue, if any, we restrict the disallowance of purchases to the extent of 2% of the purchases.
Claim of depreciation on wind mill - Held that:- The assessee has duly filed certificate from Superintendent of Engineer Jodhpur certifying the date of commencing the wind mill on 30-9-2009. Certificate from Suzlon Engineering being supplier of the plant was also filed for meter reading of September, 2009. As per these certificates wind mill has worked for more than 180 days. Accordingly, there is no justification for allowing claim of depreciation at 40% applicable for half year. In view of the documentary evidence placed on record, we direct the AO to allow depreciation for the full year on wind mill so installed by the assessee. We direct accordingly.
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2016 (6) TMI 1276
Manufacture - whether converting of Canvas roll into :- (A) the Canvas Frame, (B) Canvas Board, (C) Canvas Pad, amounts to manufacture and liable to excise duty?
Held that: - by the processes adopted by the appellant, no transformation to new product or new article takes place - Hon’ble Supreme Court in the case of J.G. Glass [1997 (12) TMI 110 - SUPREME COURT OF INDIA], held that the process of cutting/pasting undertaken by the appellant does not amount to manufacture.
The demand raised by the Revenue is held otherwise also barred by limitation as Revenue were fully aware of the existence of the appellant’s unit and its activities.
Penalty u/r 26 - Held that: - no mala fide can be attributed to Sh. Shirish Jain-appellant, the Director of the appellant company and Sh. B.K. Sharma-appellant, President (Tech.) of the company (appellant-TCPL) and therefore penalty against them under Rule 26 is also set aside.
Appeal allowed - decided in favor of appellant.
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2016 (6) TMI 1275
TPA - determination of ALP - allowing a credit period on receivable from AE - independent international transaction - Held that:- Kusum Healthcare Pvt. Ltd. Vs. ACIT [2015 (4) TMI 180 - ITAT DELHI] has taken this view that allowing the credit period over and above normal credit period prevailing in the industry is certainly relevant and part of the main international transaction of sale or purchase between the assessee and the AE. However, it was held that it cannot be treated as an independent international transaction de horse the main international transaction between the parties
We set aside this issue to the record of the A.O./TPO with the direction to redo the exercise of determination of ALP by considering the proper working capital adjustment in the comparable prices in respect of transaction of software development services provider to the AE - If after giving the necessary adjustment the international transaction of the assessee is found at arm's length then there is no question of any separate adjustment on account of allowing the credit period on the receivable from AE - the normal credit period allowed for the receivable from the AE shall be the credit period prevailing in the industry and therefore we are of the view that two months credit period should be taken as a normal business practice in the industry. Also consider the benchmark interest rate as LIBOR/PLR in the light of various precedents on this issue.
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2016 (6) TMI 1274
Rectification of mistake - principles of natural justice - Held that: - the power under Section 74 of Finance Act to rectify a mistake cannot be put under a straight jacket formula and each case has to be tested on its own facts. What is a mistake apparent from the record will have to be decided based on the facts which are placed before the concerned authority.
If the records produced by the petitioner prima facie show that there was sale of undivided share of the land, then the authority ought to have taken into consideration of the same and examined as to whether those could have been included in the total value. This undoubtedly is an error apparent on the face of the record - Furthermore, in their application under Section 74, the petitioner has specifically sought for a personal hearing which was also not been offered.
The matter is remanded to the respondent to consider the application filed by the petitioner under Section 74 of the Finance Act, after granting an opportunity of personal hearing - petition allowed by way of remand.
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2016 (6) TMI 1273
Concessional rate of tax - sales to educational institutions - Section 88 (4) of the TNVAT Act - whether the petitioner is entitled to the concessional rate of tax under section 8 (5) of the Central Sales Tax Act? - Held that: - the issue is squarely covered by the decision in the case of Technomed Electronics and another Vs. CTO, Thiruvanmiyur Assessment Circle, and another [2009 (1) TMI 821 - MADRAS HIGH COURT], where it was held that the order, dated March 31, 2008 passed by the Commercial Tax Officer, Thiruvanmiyur Assessment Circle, disallowing the concessional rate of tax at five per cent on the sales to educational institutions (impugned in W.P. No. 16154 of 2008) is set aside - matter is remitted back to the respondent to take note of the decision rendered in the above referred case, and extend the concessional rate of tax to the petitioner, by redoing the assessment for the relevant year.
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2016 (6) TMI 1272
Revision u/s 263 - cash transactions found recorded in the seized material - Held that:- As during course of assessment proceedings u/s.153A of the Act, Assessing Officer has asked for explanation in respect of various notings made in loose papers/note book/ pad found during the search carried out in various premises of assessee. The assessee contended that in the alternative the expenditure should be telescoped against the income. This was examined in detail by the Assessing Officer and also discussed in his order. This is certainly one of the possible view taken by the Assessing Officer. In view of this, the review of same u/s.263 of the Act is not justified as discussed above. Similar issue arose in A.Y.2007-08, 2008-09, 2009-10, 2010-11, 2011-12 & 2012-13. Facts being similar so following same reasoning, this issue in all these years is decided in favour of assessee. It is pertinent to mention here that all case laws relied by parties have been taken into consideration, though same may not be specifically mentioned.
Allowability of deduction u/s. l0B - Held that:- Assessee had already submitted that various permissions obtained from Kandla Economic Zone of Ministry of Commerce & Industries. The copies of invoices of new machineries obtained and installed in EOU Unit of Masar Plant for manufacturing Co-enzyme Q 10 have been placed on page nos. 51 to 173, certified to be before Assessing Officer at relevant point of time. Assessing Officer has made relevant enquiries in this regard, same were replied on behalf of assessee. Even with regard to export, enquiries were made which were replied by assessee. Even rate difference of domestic sale and export was stated before Assessing Officer inter alia submitting that there was a big quality difference in both sales i.e. domestic and foreign with regard to one consignment to France at lower rate it was not sale but sample sale in which amount is not material. It was done on minimum price just for the sake of custom clearance. Assessee can not show zero amount of sale of these sample, so nominal cost was taken for custom purpose. In such a situation, provisions of Section 263 of the Act is not justified and same is set aside. Similar issue arose in A.Y. 2008-09, 2009-10, 2010-11, 2011-12 & 2012-13. Facts being similar so following same reasoning, we set aside the order of CIT on this issue in all these years.
Huge purchases from certain concerns stationed at Dubai - held that:- , Assessing Officer called for information and same were responded at relevant point of time with regards to the transactions carried out at Dubai. For the example, our attention was drawn to page no.36 of paper book I, letter dated 15th February, 2014 addressed to assessee by concerned party i.e. Trading Inc. Similarly attention drawn to the letter of one Blue Mark Mercantile Ltd. dated 26th February, 2014 addressed to assessee regarding confirmation of accounts of Sterling Biotech Limited. This shows that Assessing Officer has examined the transactions of assessee at Dubai. In this situation, it cannot be said that no details were verified by the assessee regarding off shore transactions. Moreover, Assessing Officer has called for audited accounts of offshore branch of assessee company for verification of assessee’s claim in this regard. In such situation, CIT was not justified in invoking provisions of Section 263
List of 151 entities with their letter head and stamps and other documentary evidences found and seized during search operation from two different premises - Held that:- Assessee in certain situation has given its premises to M/s. H. S. Hathi & Co., Chartered Accountants, to use this premise to run its office because of renovation in its office 18 out of 151 details belongs to assessee group and rest belongs to M/s. H. S. Hathi & Co’s. clients as mentioned above. Thus, this clear cut factual finding arrived by Assessing Officer at relevant point of time. The assessee had submitted name, address, PAN number, details of Jurisdictional Officers in respect of 151 parties. In such a situation, CIT was not justified in giving direction to verify the details of all 151 companies assuming the same to be belonging to the assessee group.
Regarding remaining other than 18 out of 151, same did not belong to assessee as discussed above because same belong to client of M/s. H. S. Hathi & Co. who was using the premises in question on temporary basis as discussed above. In any case the share applications money of ₹ 45 crore had been received from 18 companies in A.Y. 2003-04 which is beyond the assessment years under consideration. This take care of issue raised in ground nos. 6 & 9. So, order of Assessing Officer cannot be said to be erroneous as to be prejudicial to the interest of Revenue to make it fall in provisions of Section 263 of the Act. Same is set aside.
Documentary evidence found during the course of search in respect of investment in offshore entities like USA and Dubai etc. - Held that:- All records found as discussed above in preceding para and records were not belonged to assessee company. The said contention of assessee was accepted by Assessing Officer after due consideration of the facts because in assessment proceedings, explanation for all documents were seized and submitted. In response to the queries, submissions were made to the Assessing Officer on 24.12.2013 with regard to capital advances made by Sterling Port Limited as placed on Page 37-38 of paper book part II. Assessment of said Sterling Port Limited was also completed by same Assessing Officer and all related documents and explanations were filed in said assessment. The said transaction is nothing to do with the assessee Sterling Biotech Limited. Even projection/estimation of project at Nigeria has nothing to do with assessee. Assessee has already given page-wise explanation before the Investigating Wing as well as the Assessing Officer as detailed on page nos. 28, 29 of paper book No.II. In view of our legal and factual discussion, CIT was not justified to invoke the provisions of Section 263 of the Act in regard to this allegation, so, same is set aside.
Estimation of the by-products and wastes from the data of bone consumption sourced from assessee - basis of information available on website and Assessing Officer's presumption that since the sale of gelatin is mostly to MNCs, there is no scope of suppression in respect of Gelatine - Held that:- Assessee has claimed wastage of 30% which was reduced to 5% by Assessing Officer after taking into consideration all details in this regard. Though, assessee was not satisfied with the reduction of wastage, but, facts remain that enquiry was done by the Assessing Officer at relevant point of time in assessment proceedings. So, CIT cannot be said that order of Assessing Officer is erroneous so as to prejudice to the interest of Revenue in absence of any enquiry. Under the circumstances, the order of Assessing Officer on this issue cannot be said to be erroneous, so as to prejudicial to the interest of Revenue so as to invoke provisions of Section 263 of the Act, and same is set aside.
Inflation of the capital assets by assessee - Held that:- The allegation of CIT is that there is inflation of the capital assets by assessee. Assessing Officer ought to have duly verified the addition towards fixed assets. As stated above, questionnaire was issued by Assessing Officer with regards to fixed assets as mentioned above and in response to the same, relevant details have been filed by assessee at relevant point of time as discussed above. In this background, it cannot be said that Assessing Officer has not done verification of the addition to the fixed assets. All these explanations with regard to questionnaire by Assessing Officer had been submitted before CIT in response to show cause notice and with regards to addition to the block of assets. But, same has not been taken into consideration by CIT, which is not justified. Under facts and circumstances, CIT was not justified in invoking provisions of Section 263 - Assessee appeal allowed.
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2016 (6) TMI 1271
TPA - comparable selection criteria - Held that:- Tthe assessee company is engaged in rendering services to the AE relating to designing of integrated circuits and the testing of integrated circuits along with customer support. It is also noted by the TPO that the international transactions are mainly for software services apart from re-imbursement of expenses, thus companies functionally dissimilar with that of assessee need to be deselected from final list of comparability.
Computing deduction allowable to the assessee u/s 10A - Held that:- As held by the Hon’ble jurisdictional High Court in the case of M/s Tata Elxsi ltd. (2011 (8) TMI 782 - KARNATAKA HIGH COURT) that total turnover is sum total of domestic turnover and export turnover and therefore, if an amount is excluded from the export turnover, the same gets automatically reduced from the total turnover. Respectfully following this judgment of the Hon’ble jurisdictional High Court, we direct the AO/TPO to reduce this amount which was reduced from the export turnover from the total turnover also for the purpose of computing deduction allowable to the assessee u/s 10A
Rectification of mistake - A.O. has neither included any comparable nor excluded any comparable as had been directed by DRP - Held that:- There is no dispute that as per the directions of DRP, some comparables were to be excluded and some were to be included but as per the final assessment order, the A.O. has neither included any comparable nor excluded any comparable as had been directed by DRP and therefore, his order is in violation of sub section 13 of sec.144C. But this is also true that there is wrong observation in this final assessment order that DRP has confirmed the proposed assessment order. Under these facts, we find force in the submissions of the learned DR of the revenue that this is an apparent mistake in the assessment order rectifiable u/s 154 of the I T Act.
Thus since the time limit of 4 years prescribed in section 154 has not elapsed, we feel it proper to restore the entire matter in this year to the AO to pass fresh assessment order as per the directions of DRP and thereafter, both sides are at liberty to file appeal before the tribunal if not satisfied with that order.
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2016 (6) TMI 1270
Sale of shares and redemption of units of Mutual Fund - capital gains (long term and short term) or business income - Held that:- As noticed from assessee’s investment chart regarding long and short term capital gains that most of the investments have seen holding period for quite a longer duration. There is a very miniscule percentage of share investments being made and sold in a very short span of time less than a week. The assessee’s long term capital gains arise from investment held for much longer duration of more than a year. It has come on record that his balance sheet shows two different patterns of trading and investment portfolio. We come to his City Bank borrowings of ₹ 20 crores. It emanates that the assessee had indeed availed this loan. But the same was for a period of less than one month whereas his investments are seen to have carried forward since long. The Revenue fails to rebut all these crucial findings recorded by the lower authorities. We adopt judicial consistency in these facts and circumstances to hold that the CIT(A) has rightly treated assessee’s profits/losses arising from shares investments as in the nature of capital gains than business income.
Section 14A disallowance relating to exempt income from dividends - Held that:- A perusal of section 14A(2) reveals that the Assessing Officer has to record a non satisfaction having regard to an assessee’s account that the same are not correct in respect to expenditure in relation to exempt income not forming part of the total income under the act. There is no dispute that Rule 8D is applicable w.e.f. assessment year. 2008-09. However, we notice from the assessment order that there is no such satisfaction or non satisfaction being recorded before invoking Rule 8D resulting in the impugned disallowance. The Revenue further fails to rebut the lower appellate finding that the assessee has not incurred any expenditure as held in Commissioner of Income Tax-II Versus M/s Hero Cycles Ltd. (2009 (11) TMI 33 - PUNJAB AND HARYANA HIGH COURT ). Its arguments seeking to revive the impugned disallowance accordingly fail.
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2016 (6) TMI 1269
Denial of registration u/s 12AA - sum received from the trustees towards corpus fund clearly covered by the provision of see 2(24)(iia) - Held that:- The first proviso to section 12A(2) was brought in the statute only as a retrospective effect, with a view not to affect genuine charitable trusts and societies carrying on genuine charitable objects in the earlier years and substantive conditions stipulated in section 11 to 13 have been duly fulfilled by the said trust. The statute provides that registration once granted in subsequent year, the benefit of the same has to be applied in the earlier assessment years for which assessment proceedings are pending before the ld. A.O., unless the registration granted earlier is cancelled or refused for specific reasons. The statute also goes on to provide that no action u/s147 could be taken by the AO merely for non-registration of trust for earlier years.
Once registration is granted u/s 12AA of the I T Act, section 11 and 12 will apply in respect of income of trust for any AY preceding the AY in which registration is granted, provided appeal is pending before the CIT(A) and objects and activities of the assessee trust are the same as in the year of registration. In the instant case, the assessee trust was granted registration w.e.f 14.9.2009 and the CIT(A) was aware of grant of registration, since the appeal was disposed off only on 11.9.2015. Further, in the instant case the notice u/s 148 of the Act was issued only on 29.3.2010 i.e subsequent to the grant of registration on 14.9.2009, hence, the second proviso put an embargo on the issuance of notice u/s 148 of the Act. Therefore, the CIT(A) ought to have taken note of the 1st proviso as well as 2nd proviso to section 12A, which was inserted by the Finance Act, 2014 w.e.f 1.10.2014. Since both the parties have agreed that the matter needs fresh consideration by the CIT(A), in line of the dictum laid down by the Cochin Bench of the Tribunal in the case of SNDP Yogum (2016 (3) TMI 1110 - ITAT COCHIN ), we restore the issue to the CIT(A). Appeal filed by the assessee is allowed for statistical purpose
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2016 (6) TMI 1268
Levy of service tax - Tour operator service - It appeared to department that various chartered/contract/tour services provided by APSRTC to the public fall under the “ tour operator” services as defined under the clause (115) of Sec.65 of the Finance Act, 1994 and that APSRTC were providing various tour operator services and evading payment of Service Tax - Held that: - The departments do not have a case that the buses of the assessee used for carrying passengers as per contract to destinations conform to such specifications so as to make them fall within the definition of contract carriages. It is not disputed that the vehicles used by the assessee for the impugned services are “stage carriage” vehicles and are carrying out the impugned activities only on the basis of temporary permits issued by A.P. Transport Authorities. They do not at all become contract carriages as they do not conform to the definition of contract carriage in Section 2(7) of M.V. Act.
The requirement of permit granted under the Motor Vehicle Act, 1988, it was imperative that the vehicle being used by the respondent to possess tourist permit and the vehicle is a tourist vehicle. Undisputedly the impugned vehicles are out of purview of the definition of tourist vehicle. The reservation of the department on this aspect is that the conclusion arrived at by the learned Commissioner (Appeals) is prima facie wrong as much as the tourist vehicle operated by the respondent will not be out of the purview of the said definition. The reservation is without any evidence and it neither challenge the veracity or the contents of the certificate. As regard the other grievance of the appellant that the learned Commissioner (Appeals) has not taken into consideration the fact that the lower adjudicating authority has himself seen the vehicle and found that the vehicles predominantly covered the specifications in Rule 128 of Motor Vehicle Rules, 1988.
The impugned activities carried out by the assessee will not attract the definition of “Tour operator” under section Section 65 (52) of Finance Act,1994 prior to 10.09.2004 and under Section 65 (115) for the remainder period covered in this case - appeal allowed - decided in favor of assessee.
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2016 (6) TMI 1267
TPA - selection of comparable - Held that:- Assessee has generated revenue under the following categories hiring solutions, marketing solutions, premium subscriptions. The company has characterised itself as being engaged in marketing and sales promotion activities with its AE and is a Support service provider that does not own any intangibles, thus companies functionally dissimilar with that of assessee need to be deselected from final list.
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2016 (6) TMI 1266
Nature of expenditure - Expenditure incurred on temporary wooden structures - allowable as revenue expenditure or capital expenditure - Held that:- CIT(A) has taken correct view of the facts of the case and decided that the expenditure incurred on leased premises on temporary wooden structure (interior decoration) is a revenue expenditure. Accordingly, the ground raised by the Revenue in all these appeals is dismissed.
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2016 (6) TMI 1265
TPO - comparable selection criteria - Held that:- The functional profile of the assessee is to provide specified procurement services to its foreign company Adidas Consultants Ltd. The nature of services have been brought out at para 8.1 and 8.2 of that order. A perusal of these demonstration that the functional profile of M/s Chemical & Metallurgical Design Co.Ltd. are totally different from the functional profile of the assessee company. Thus this company should be excluded as a comparable company for determining the ALP. The TPO/AO is directed accordingly.
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2016 (6) TMI 1264
CENVAT credit - outdoor catering services - clearing and forwarding services - outward transportation from the factory gate to the customers - Held that: - As regard the outdoor catering services, the Larger Bench of the Tribunal in the case of CCE vs. GTC Ltd. [2008 (9) TMI 56 - CESTAT MUMBAI] has held in favor of the assessee - As regards the clearing and forwarding services, the Hon'ble Gujarat High Court in the case of CCE, Ahmedabad vs Cadila Healthcare Ltd. [2013 (1) TMI 304 - GUJARAT HIGH COURT] has held that clearing and forwarding agent services are cenvatable - in the case of outward transportation of the goods from the factory of the customer place has been held to be cenvatable by the Larger Bench decision of the Tribunal in the case of CCE vs ABB Ltd. [2011 (3) TMI 248 - KARNATAKA HIGH COURT] - appeal dismissed - decided against Revenue.
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2016 (6) TMI 1263
Adjustment under Section 145A - AO has only considered the excise duty on closing stock and has not given effect to the excise duty on opening stock, purchases and consumption - Held that:- We are of the view that as per Section 145A of the Income-tax Act, 1961, wherein method of valuation will be applicable not only in closing stock, but on inventory i.e. opening and closing stock as well as on both purchases and sales. Therefore, the AO is not justified in adding the excise duty in closing stock of raw materials and incidental goods. We, therefore, direct the AO to compute the total income by adding cess, duty or tax paid incurred not only in closing stock but also in purchases, opening stock, sales, wherever such excise duty is already added. The AO is directed to verify the working given by the assessee on pages 3, 4, 5, 6, 7, 8, 9 and 10 for the assessment year 2002-03 to assessment year 2009-10. The AO is directed to verify the same and pass the order accordingly.
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2016 (6) TMI 1262
Addition u/s 14A - Held that:- In absence of direct nexus between the interest bearing fund and investment in shares, no disallowance can be made by the Assessing Officer U/s 14A. Accordingly, we reverse the order of the ld CIT(A) and allow the assessee’s appeal.
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2016 (6) TMI 1261
Valuation - goods sold from warehouse - includibility - cost of transportation - Held that: - In terms of the Valuation Rules, it is clear that an assessee will be entitled to deduction of the cost of transportation from the premises of the depot till the premises of the ultimate customers - The appellant has asserted that the lower authority has mistakenly added the above cost considering it as the freight incurred from the warehouse to the depot. To confirm the facts, the relevant submission on record will need to be verified - appeal allowed by way of remand.
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2016 (6) TMI 1260
Reversal of CENVAT credit - Rule 6(3)(b) of the CCR - only grievance of the Revenue is that such reversal has taken place subsequent to the clearance of goods - Held that: - such reversal, even if subsequent to clearance of final product, is appropriate and result in a situation as if no credit was ever availed by the assessee - reliance placed in the case of COMMISSIONER OF CENTRAL EXCISE Versus ASHIMA DYECOT LTD. [2008 (9) TMI 87 - HIGH COURT GUJARAT] - appeal dismissed - decided against Revenue.
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2016 (6) TMI 1259
TPA - comparable selection criteria - Held that:- Assessee is engaged in providing software development services (SDS), IT enabled services (ITES) and market support services (MSS) to its AEs. The company is primarily engaged in the business of software development for export, more specifically, the assessee is involved in development of switching integration and comer stone modules for Janus release, a next generation messaging products, thus companies functionally dissimilar with that of assessee need to be deselected from final list.
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2016 (6) TMI 1258
Issues Involved:
1. Selection of comparables for determining Arm's Length Price (ALP).
2. Rate of depreciation applicable to computer and computer software.
3. Capacity utilization adjustment.
Detailed Analysis:
1. Selection of Comparables for Determining ALP:
Background:
The assessee company, incorporated on 10.07.1990, engaged in software development services, had international transactions with its Associated Enterprises (AEs). The Transfer Pricing Officer (TPO) and the assessee disagreed on the selection of comparables to determine the ALP.
Assessee's Approach:
The assessee identified 19 comparables with an average profit margin of 11.48% on cost, asserting that its operating margin of 15% was at arm's length. The TPO, however, selected 26 comparables, including only 4 from the assessee's list.
Dispute on Comparables:
The main dispute centered on the inclusion/exclusion of certain companies as comparables. The assessee sought the exclusion of:
- Accel Transmatic Ltd.
- Celestial Labs Ltd.
- Helios & Matheson Information Technology Ltd.
- Infosys Technologies Ltd.
- KALS Information Systems Ltd.
- Persistent Systems Ltd.
- Tata Elxsi Ltd.
- Wipro Ltd.
Tribunal's Analysis:
- Accel Transmatic Ltd.: The Tribunal restored the matter to the TPO to verify the assessee's claim that the company derived more than 45% of its total operating revenue from hardware products/services.
- Celestial Labs Ltd.: Excluded from the list of comparables as it was engaged in developing software tools with its intellectual property, unlike the assessee who provided software development services on a contract basis.
- Helios & Matheson Information Technology Ltd.: Excluded as it was engaged in various ITES BPO services and software sales, unlike the assessee.
- Infosys Technologies Ltd.: Excluded due to its giant scale, risk profile, and ownership of branded/proprietary products, making it incomparable to the assessee.
- KALS Information Systems Ltd.: Excluded as it was engaged in software development, training, and product sales, unlike the assessee.
- Persistent Systems Ltd.: Excluded due to the merger of another company into it, affecting its financial comparability.
- Tata Elxsi Ltd.: Excluded as it was involved in R&D activities and developing hardware/software for embedded products, unlike the assessee.
- Wipro Ltd.: Excluded due to its giant scale and different risk profile, similar to Infosys Technologies Ltd.
Other Comparables:
- Avani Cimcon Technologies Ltd.: Included as it was a pure software development service provider.
- E-Zest Solutions Ltd.: Not pressed for exclusion by the assessee.
- Ishir Infotech Ltd.: Included as it met the employee cost filter and was functionally comparable.
2. Rate of Depreciation Applicable to Computer and Computer Software:
Background:
The assessee claimed depreciation at 60% for mini power backup (UPS), treated by the Assessing Officer (AO) as plant and machinery, allowing only 15% depreciation.
Tribunal's Decision:
The Tribunal directed to allow depreciation at 60%, following the decision of the Delhi High Court in CIT Vs. Orient Ceramics & Industries Ltd., which held that UPS forms part of computer peripherals and accessories.
3. Capacity Utilization Adjustment:
Background:
The assessee claimed that capacity utilization adjustment was not allowed, impacting the comparability analysis.
Tribunal's Decision:
The Tribunal restored the matter to the CIT(A) to provide an opportunity for the assessee to present its case regarding capacity utilization adjustment and ensure comparables are on a level playing field with the assessee.
Conclusion:
The Tribunal partly allowed the appeals, directing the TPO/AO to re-evaluate the ALP determination and consider the specific adjustments and exclusions as discussed. The Tribunal also directed to allow the higher depreciation rate for UPS and to address the capacity utilization adjustment claim.
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