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TMI Blog2015 (10) TMI 2647X X X X Extracts X X X X X X X X Extracts X X X X ..... shall take into consideration such judicial precedents before taking a decision about the comparability of e-Infochips Bangalore Ltd., with the assessee company. Accordingly, assessee’s appeal is treated as partly allowed for statistical purposes. Infosys Technology Ltd., be excluded from the list of comparables on account of functional dissimilarity and owning of significant intangibles and brand value. As regards L & T Infotech Ltd.be excluded as segmental data is not available and was rejected by the TPO in the earlier years on this ground alone. As regards Tata Elxsi Ltd. this company be excluded on functional dissimilarity. - ITA.No.409/Hyd/2015, ITA.No.415/Hyd/2015 - - - Dated:- 23-10-2015 - SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER For The Revenue : Mr. Valluri Srinivas For The Assessee : Mr. Ravi Bharadwaj ORDER PER SMT. P. MADHAVI DEVI, J.M. Both the above are cross-appeals of the Assessee as well as the Revenue for the A.Y. 2010-2011 against the assessment order dated 09.02.2015 passed by the A.O. under section 143(3) read with section 144C of the I.T. Act, 1961. 2. Brief facts of the case are that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d., 6. Evok Tech 7. E-Zest Solutions Ltd., 8. Infosys Technology Ltd., 9. Kals Information Systems Ltd., (Seg.) 10. Kuliza Tech 11. L T Infotech Ltd., 12. Mindtree Ltd., (Seg.) 13. Persistent Systems Solutions Ltd., (Merged) 14. R S Software (India) Ltd., 15. Sasken Communication Technologies Ltd., 16. Tata Elxsi Ltd., (Seg.) 17. Thinksoft Global Services Ltd., 8. Zylog Systems Ltd., 19. Persistent Systems Ltd., 2.2. The assessee submitted its objections to the comparable companies selected by the TPO. However, the TPO rejected the assessee s contentions and proceeded to compute the average margin of the comparables at 22.69% by adopt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervices. He has submitted that the financials of e-Infochips Bangalore Ltd., also does not give segmental data and there are huge variations in the margins of the said company from the earlier assessment years. He further submitted that during the relevant assessment year, the said company is having an amalgamation status (not active) as is evident from the data available on the website of this company. He further submitted that there is an error in the margin computation of this company and for all these reasons, according to the Ld. Counsel for the assessee, this company has to be excluded from the final comparables selected by the TPO and as confirmed by the DRP. 5. The Ld. D.R. on the other hand, supported the orders of the TPO and the DRP. 6. Having regard to the rival contentions and the material on record, we find that the assessee had raised objections about inclusion of this company (e-Infochips Bangalore Ltd.,) before the TPO but the TPO after considering the financials of this company has retained this company as a comparable. We find that assessee has also filed the financials of e-Infochips Bangalore Ltd. before us. On comparison of the particulars considered by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he following disclosures is made - (c) Inventories : Unbilled Revenue (Software Development) is valued At Cost. (f) Sales and Other Income : (i) Revenue from software services is recognized as per the terms of relevant agreements/development contracts. 9. The company is engaged in the development and maintenance of computer software. The production and sales of software cannot be expressed in any generic unit. Hjence, it is not possible to give the quantitative details of sales and certain other information as required under paragraph 3.4C and 4D of part-II of Schedule-VI to the Companies Act, 1956. In view of the above, the contention of the taxpayer is rejected and the company is retained as a comparable. (Page 10 and 11 of the paper book filed by the assessee) 16. Segment Information : Information about Primary Segments : The company is primarily engaged in Software Development and I.T. enabled services which is considered the only reportable business segment as per Accounting Standard AS 17 Segment Rep ..... X X X X Extracts X X X X X X X X Extracts X X X X
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