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TMI Blog2017 (11) TMI 1057X X X X Extracts X X X X X X X X Extracts X X X X ..... of Income-tax (Appeals) for fresh examination on this aspect of insurance charges i.e., how much of insurance charges were attributable to export of computer software. The Commissioner of Income-tax (Appeals) is directed to adjudicate this issue afresh after affording opportunity of hearing to the assessee as well as the Assessing Officer. This ground is allowed for statistical purposes. - I.T. (TP) A. Nos. 1519 and 1687/Bang/2013 - - - Dated:- 13-9-2017 - A. K. Garodia (Accountant Member) And Laliet Kumar (Judicial Member) For the Appellant : Percy Pardiwala, Senior Counsel For the Respondent : Neera Malhotra, Commissioner of Income-Tax-Departmental Representative ORDER Laliet Kumar (Judicial Member) 1. These are cross-appeals filed by the assessee and the Revenue against the order of the Commissioner of Income-tax (Appeals)-LTU, Bengaluru, dated August 29, 2013 for the assessment year 2005-06. 2. The grounds of appeal raised by the assessee are as under : 1. That the order of the learned Commissioner of Income-tax (Appeals) LTU is bad in law to the extent challenged herein. 2. That the learned Commissioner of Income-tax (Appeals) LTU ought ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r.Com (P.) Ltd., the learned Commissioner of Income-tax (Appeals) LTU ought to have accepted (Gate and L and T Infotech as suitable comparables since the turnover of the appellant as well as the said comparable companies fail in the second category of ₹ 200 crores to ₹ 2,000 crores. 8. Without prejudice the learned Commissioner of Income-tax (Appeals) LTU having selected Visual Soft Technology (with the turn over of ₹ 185.43 crores) as a comparable company, although its turnover is less than ₹ 200 crores, the learned Commissioner of Income-tax (Appeals) LTU further ought to have accepted Sasken Communication Technologies Ltd. with the turnover of ₹ 189.05 crores as a comparable company since the related party transaction in the case of Sasken is just 0.23 per cent. of the turnover (i.e., much less than 1 per cent.). 9. The learned Commissioner of Income-tax (Appeals) erred in not dealing with the submissions of the appellant in respect of salary filter applied in the case of Exensys Software Solutions Ltd., Sankhya Info tech Ltd., Four Soft Ltd. and Thirdware Solutions Ltd. 10. The learned Commissioner of Income-tax (Appeals) erred in no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unds of appeal 1. The appellant is engaged in the business of software development services. During the year the appellant had entered into inter national transactions and therefore as required under chapter X had conducted transfer pricing study on its own. 2. One of the filters adopted by the appellant in the search process of comparable companies in its transfer pricing study was that, the companies with the ratio of research and development expenses to sales greater than 3 per cent. were rejected since that would indicate the possibility of ownership of intangibles or provision of activities not involved in pure service activity. This was done so because the appellant was only in the business of software development services. During the transfer pricing proceedings, the appellant had made submissions in a great detail for exclusion of companies who has conducted research and development activities (i.e., companies with the ratio of research and development expenses to sales greater than 3 per cent.). However, the Transfer Pricing Officer did not accept the appellant's submissions. 3. The above issue is specifically dealt by the Transfer Pricing Officer in his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... price at ₹ 35,86,13,736. Aggrieved by the order of the Transfer Pricing Officer, the assessee went in appeal before the Commissioner of Income-tax (Appeals). The Commissioner of Income-tax (Appeals) had partly granted the relief to the assessee, therefore both the parties are before us. 6. Now the assessee is in appeal before us aggrieved by the order passed by the Assessing Officer in pursuance of the order of the Commissioner of Income-tax (Appeals), by making the following additions : (i) Computation of deduction under section 10A ₹ 11,18,97,312 (ii) Transfer pricing ₹ 35,86,13,736 Transfer Pricing grounds of the Revenue as well as the assessee 7. At the out set, the bench has pointed out that the Tribunal is restoring the matter back to the file to the Assessing Officer/Transfer Pricing Officer for fresh adjudication in those cases where the claim of the assessee or of the Revenue pertains to application of turnover filter, high profit filter or abnormal margins in the light of the judgment of the hon'ble Delhi High Court rendered in the matter of Chryscapital Investment Advisors (India) P. Ltd. v. Deputy CIT [2015] 376 ITR 183 (Delhi) ; [20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 28. The learned counsel for the assessee has contended in this regard that the assessee is engaged in the business of export of computer software and the Assessing Officer has also made an observation in this regard. Software development agreement with the appellant's customer, Robert Bosch GmbH is filed. The learned counsel for the assessee further contended that the hon'ble jurisdictional High Court in the case of CIT v. Infosys Technologies Ltd. vide I. T. A. Nos. 2972, 2973, 2974 and 3015 of 2015, dated February 13, 2013 has held that expenditure in foreign currency need not be excluded from the export proceeds from the export of computer software. Therefore, in the light of this judgment, the foreign currency expenses should not be excluded from the export proceeds. 11. The assessee has not pressed ground No. 16. Hence the same is dismissed as not pressed. Revenue's appeal I. T. (TP) A. No. 1687/Bang/2013 Ground No. 1 is general in nature. 12. Ground Nos. 2 and 3 pertain to exclusion of insurance charges incurred in foreign currency, from export turnover for providing services outside India. In this regard, the learned authorised representative has d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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