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TMI Blog2013 (9) TMI 334X X X X Extracts X X X X X X X X Extracts X X X X ..... s incurred for delay in UTI dividend payments, etc. It is to be seen that the delay charges attributable to dividend tax partakes the character of dividend tax itself. Dividend tax as such is not deductible - the delay charges also are not deductible - This is the same case in respect of interest for delay in remitting TDS - There cannot be a different view on expenses incurred for delay in UTI dividend payments - Therefore, these expenses claimed by the assessee are not deductible in computing its income. - Decided against the assessee. - IT APPEAL NOS. 938 (MDS.) OF 2008 & 528 (MDS.) OF 2009 - - - Dated:- 8-1-2013 - Order The order of the Bench was delivered by Dr. O. K. Narayanan (Vice-President).-These two appeals are filed by the Revenue for the assessment years 2003-04 and 2004-05. The crossobjection is filed by the assessee for the assessment year 2003-04. First, we will consider the appeal and the cross-objection filed for the assessment year 2003-04. The appeal and the cross-objection are directed against the order of the Commissioner of Income-tax (Appeals)-XI at Chennai, passed on January 7, 2009 and arise out of the assessment completed under section 143(3), r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it level indicator. Thereafter, the Transfer Pricing Officer examined the selection of comparables made by the assessee-company. On the basis of details available in the approved data base, the assessee-company has initially identified 521 companies for the purpose of comparison. This was made on the basis of similarity of functions. From the above gross lot, the companies for which data are not available for the financial year 2002-03, were omitted. Thus 259 companies were eliminated. The balance 262 companies were again considered. As the third criterion, the assessee-company adopted the turnover test. As far as the assessee-company is concerned, its turnover of software is Rs. 22 crores. On this basis, the assessee-company has chosen a range of Rs. 5 crores to Rs. 250 crores as comparable turnover. When this criterion was brought in, another 116 companies were eliminated and thereafter 146 companies remained in the comparison list. Thereafter, the assessee examined as to whether these 146 companies had transactions with associated enterprises or not. Relying on company background and the other relevant matters, the assessee-company eliminated 83 companies and adopted the balan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade by the Transfer Pricing Officer. It is the case of the Revenue that the Commissioner of Income-tax (Appeals) has failed to appreciate that on the selection of comparables, emphasis was placed on rule 10B(4) of the Income-tax Rules on data relating to the financial year 2002-03, in which the international transaction has been entered into. We heard Shri G. K. Dhall, the learned Commissioner of Income-tax appearing for the Revenue, on this point at length. Shri T. Banusekar, the learned chartered accountant, appeared for the assessee-company. After hearing both sides in detail, we considered the issue very carefully. There is no dispute in the selection of the most appropriate method to arrive at the arm's length price. By and large there is no dispute on the criteria adopted by the assessee to select the comparables. The Transfer Pricing Officer himself has discussed in detail the six criteria relied on by the assessee-company to finally draw out the list of comparable companies. But, the deviation took place in the final list of comparables relied on by the Assessing Officer as against the companies selected by the assesseecompany. The list of comparable companies relied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting the arm's length price addition of Rs. 4.58 crores. Moreover, we find from the order passed by the Commissioner of Income-tax (Appeals) that for the immediately succeeding assessment year 2004-05, the Commissioner of Income-tax (Appeals) has held in the assessee's own case that the Transfer Pricing Officer should not have rejected the arm's length price disclosed by the assessee. Further, in the subsequent assessment year 2005-06, the Transfer Pricing Officer himself has accepted the arm's length price returned by the assessee-company. It is very relevant to note that for all these assessment years, the factual matrix of the case remained exactly the same. Therefore, in the facts and circumstances of the case, we uphold the order of the Commissioner of Income-tax (Appeals) in deleting the arm's length price addition of Rs. 4.58 crores. The relevant grounds raised by the Revenue fails. The next issue raised by the Revenue in the present appeal is that the Commissioner of Income-tax (Appeals) has erred in directing the Assessing Officer to allow exemption under section 10A of the Act. This issue was considered by the Income-tax Appellate Tribunal, Chennai Bench-A, in the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeals) has erred in directing the Assessing Officer to allow the claim of expenses towards development of software as allowable business expenditure, thereby deleting the addition of Rs. 3,54,480. The Commissioner of Income-tax (Appeals) has deleted the above addition, relying on the decision of the Tribunal rendered in the case of Business Information Processing Services v. Asst. CIT [1999] 239 ITR (AT) 19 (Jaipur). In the said order, the Tribunal has held that computer software consists of programmes which a computer uses to perform a task on the basis of logic supplied by the user. Such software can be either created or purchased and can be modified if there are subsequent changes as the assessee is required to change the software within a very short span of time and they become outdated because of change of system and change of technology. Hardware is purchased once, but software is equipment which is purchased separately to develop the various programmes and to take the help of the various schemes as required by the users. The Tribunal continued to observe that day by day the systems are developed in a new way and softwares are needed like a raw material for use in manufactur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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