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TMI Blog2016 (3) TMI 1270X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee undertakes to produce the copies of invoices to the AO. Therefore, without going into the merits of action of AO, we direct the AO to examine the same and allow the claim. The issue of claim of 10A is accordingly set aside to the AO for that limited purpose. Claim of deduction u/s. 10A. - AO excluded leased line charges and travelling expenses from the export turnover but has not reduced from the total turnover - Held that:- This issue was already decided by the jurisdictional Hon'ble High Court in the case of Tata Elxsi Ltd., Vs. CIT (2011 (8) TMI 782 - KARNATAKA HIGH COURT) wherein it was held that whatever expenses reduced from export turnover should also be reduced from total turnover, while computing the deduction u/s. 10A of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roceeds were realized within the permitted time. The AO passed a draft assessment order u/s. 144C of the Act dt. 24th December, 2010 with the following adjustments: Rs. Total income as returned by assessee 7,000 Add: Adjustments: 1. Transfer Pricing adjustment 1,11,77,183 2. Denial of tax holiday u/s. 10A of the Act on account of non-production of FIRCs and reduction in tax holiday on account of difference of opinion of the term 'export turnover'. 2,35,83,305 Assessed Income 3,47,67,488 2.1. Assessee preferred an appeal before the DRP against the said draft order. DRP upheld the transfer pricing adjustment and reduction in tax holiday claim on account of the term 'export turnover'. However, with regard to disallowance of entire t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tter was adjudicated. Considering the submissions and examining the facts as placed on record, we are convinced that assessee has reasonable cause in not filing the appeal in time and so the delay in filing the appeal is condoned and appeal is admitted. Corporate matters: 4. Ground No. 2 raised by assessee is on denial of deduction u/s. 10A on the ground of non-production of export invoices. At the draft assessment order stage, AO denied the deduction u/s. 10A on the reason that Form 56A supporting foreign inward remittances (FIRC's) were not produced. On objection from assessee and furnishing of copies, DRP directed the AO to examine the same and allow deduction. AO, however, denied the entire deduction on the reason of non-production o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t relief even though the issue was already decided by that time by various orders of ITAT. This issue was already decided by the jurisdictional Hon'ble High Court in the case of Tata Elxsi Ltd., Vs. CIT,342 ITR 98 (Kar) wherein it was held that whatever expenses reduced from export turnover should also be reduced from total turnover, while computing the deduction u/s. 10A of the Act. We direct the AO accordingly. Ground is allowed. TP adjustment: 6. Assessee has rendered software development services to an extent of ₹ 17.34 crores with a net cost plus margin of 15.65%. TPO has selected 26 comparables and proposed TP adjustment of ₹ 1,11,77,183/-. DRP confirmed the same. Assessee has raised various sub-grounds in Ground No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9616.09 3.65 Arithmetic mean 25.14 6.2. Out of the above, assessee has not objected to certain comparables and also those which are not objected to before DRP/TPO, even though some other companies were also excluded by the orders of ITAT in various other similarly placed companies. Therefore, the agreed list of companies by assessee are as under: i. Datamatics Ltd., (Sr.No.4) ii. Flextronics Software Sustems (Seg) S.No. 6 iii. Geometric Ltd., (Seg) S.No. 7 iv. Igate Global Solutions Ltd., S.No. 9 v. LGS Global Ltd., S.No. 13 vi. Mediasoft Solutions Ltd., S.No. 15 vii. RS Software (India) Ltd., S.No. 20 viii. R Systems International Ltd., S.No. 21 ix. Sasken Communication Techn Ltd., S.No. 22 x. SIP Technologies & Exports Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ucts 9. Lucid Software Ltd., Functional dissimilarity development of soft products & R&D activity. 10. Persistent Systems Ltd., Functional dissimilarity. out sourced software development. No segmental data 11. Quintegra Solutions Ltd., Functional dissimilarity. focus on software development and consultancy services. 12. Tata Elxsi Ltd., (Seg) Functional dissimilarity. products, design services, high end services. 13. Thirdware Solutions Ltd., Functional dissimilarity. software and product development trading and licenses. 14. Wipro Ltd., (Seg) Functional dissimilarity, wide range of services, products design and consultancy. We direct the TPO to exclude the above comparables. 6.5. One comparable, Megasoft Ltd., is functio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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