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TMI Blog2016 (1) TMI 1273X X X X Extracts X X X X X X X X Extracts X X X X ..... . Quintegra Solutions Ltd. and M/s. Vama Industries Ltd.) 3. Regarding M/s. Quintegra Solutions Ltd., the ld. AR submitted that there is no extra ordinary event taken place. According to the ld., AR, the assessee company is not merged with the holding company during the financial year 2008-09. As such, Quintegra Solutions Ltd and Vama Industries are comparable companies to the assessee's case while determining the ALP by the TPO. 4. On the other hand, the ld. DR submitted that during the year, the Government of Singapore, Ministry of Law has wound up this subsidiary pursuant to an order of Court dated 9.1.2009 and subsidiary has been merged with the holding company as per US laws. Being so, it was rejected by the TPO. 5. We have heard bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to determine the ALP. 8. We have heard both the parties and perused the material on record. Similar issue was considered by the Tribunal, Bangalore Bench in the case of M/s. CISCO Systems (India) Pvt. Ltd. in IT(TP)A No. 271/Bang/14 dated 14.8.2014 wherein Bodhtree is not considered as a comparable one and the Tribunal held in paragraph 26.1 as follows: 26.1 Bodhtree Consulting Ltd.:- As far as this company is concerned, it is not in dispute that in the list of comparables chosen by the assessee, this company was also included by the assessee. The assessee, however, submits before us that later on it came to the assessee's notice that this company is not being considered as a comparable company in the case of companies rendering softwar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elopment services company." 9. The same view was taken by the Tribunal, Delhi Bench in the case of Ciena India Pvt. Ltd. in ITA No.1453/Del./14 dated 24.4.2015, wherein it was held as under: "9.6. Coming back to the facts of the instant case, we find from Schedule 12 that there is a mention of Significant accounting policy at Sl. no.3, which provides that : "Revenue from software development is recognized based on software development and billed to clients." If some software development project is incomplete at the end of the year, this Note may entail two situations , viz., the first, in which the expenses incurred in respect of such software development may be capitalized, which appears to be a more rational manner of depicting the tru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... complete at the end of the year, also must have been included in the expenses of the last year alone, but, the income getting recognized on the raising of bills in the current year. This albeit, patently deforms the correct profitability on year to year basis, yet, but we cannot help the situation. When the position of accounts of Bodhtree is such that it does not properly match expenses with revenue, it loses its credibility for making a logical comparison with a company that accounts for expenses matching with the revenue. Once it is held that the profits of Bodhtree Consulting Ltd. do not represent fair profitability on year to year basis, this company loses its tag of an effective comparable. We, therefore, order for the exclusion of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income and the assessee has not used any interest bearing funds for investment. On the contrary, the ld. DR submitted that the assessee has given sufficient opportunity to explain that the expenditure was incurred for earning exempted income and the assessee has not produced necessary evidence to support its case. In our opinion, the decision of the Mumbai Bench of the Tribunal in the case of M/s. Daga Global Chemicals Pvt. Ltd. in ITA No.5592/Mum/2012 dated 1.1.2015 and the decision of the Delhi High Court in the case of Joint Investments Pvt. Ltd. vs. CIT in ITA No.117 of 2015 dated 25.2.2015 is having bearing on this issue, wherein it was observed as under: "6. Heard both the parties. On a perusal of the order of Mumbai Bench of the T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee credited dividend income of Rs. 1,82,262/- in its profit and loss account. The Assessing Officer while framing the assessment invoke section 14A r.w. Rule 8D by contending that assessee claimed various expenses which are related to exempt income in its profit & loss account and disallowed Rs. 14,58,412/-. On appeal, before the ld. Commissioner of Income tax (Appeals) broadly the stand taken in the assessment order was affirmed against which the assessee is in further appeal before this Tribunal. The totality of facts clearly indicates, as claimed by the assessee that no borrowed funds were utilized for earning the exempt income by the assessee and further the dividend were directly credited in the bank account of the assessee an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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