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TMI Blog2018 (1) TMI 89X X X X Extracts X X X X X X X X Extracts X X X X ..... iness of software development, thus companies functionally dissimilar with that of assessee need to be deselected from final list. Computation of deduction u/s 10A - Held that:- Exclude the telecommunication charges both from the export turnover as well as from the total turnover for the purposes of computation of deduction u/s 10A of the Act. We find that this issue is covered in favour of the assessee by the decision of the Hon'ble Karnataka High Court in the case of CIT Vs. Tata Elxsi Ltd. (2011 (8) TMI 782 - KARNATAKA HIGH COURT) - ITA No.633/Hyd/2011 And ITA No.972/Hyd/2011 - - - Dated:- 29-12-2017 - P. Madhavi Devi, Judicial Member And Shri S. Rifaur Rahman, Accountant Member For The Assessee : Shri A.V. Raghuram For T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c) In not accepting the contention of the appellant that due weightage ought to be given for the increased cost and expenses incurred in anticipation of future growth, the benefits of which were reaped in future, and by holding that such plea at the appellate stage before CIT(A) is not permissible when the facts were available and it was necessary to consider them for determining correct arm's length price. d) In not excluding from the list of comparables two companies having very high margin viz., Exensys Software Solutions Ltd. and Thirdware Solutions Ltd. e) In not excluding from the list of comparables a company having very large turnover viz., Infosys. f) In confirming that the amount of adjustment under tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cord, we find that as regards the allowability of deduction u/s 43B of the Act of Employer s contribution to PF and ESIC, the Hon'ble Supreme Court has held that if it is paid on or before the due date of the filing of the return u/s 139(1) of the Act, it is allowable. As regards the applicability of such proviso to the disallowance made u/s 36(1)(va) of the Act, we find that decisions are both against and in favour of the assessee. We find that the Coordinate Bench of this Tribunal at Visakhapatnam in the case of DCIT vs. Eastern Power Distribution Company of A.P. Ltd (cited Supra) has considered all the above decisions referred to by the assessee as well as the DR and has held that there is no distinction between the employees and em ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) who confirmed the order of the AO as far as the TP adjustment is concerned. Against this adjustment confirmed by the CIT (A), the assessee is in appeal before us. 5. The assessee has objected to (i) Exensys Software Solutions Ltd, and (ii) Thirdware Solutions Ltd being taken as comparables on the ground that both of them are having very high profit margins. Therefore, according to the assessee, they should be excluded from the comparables for the purpose of determination of the ALP. As far as Infosys Technologies Ltd is concerned, he objected to it on the ground of its huge turnover. On the very same ground, the assessee is objecting to the other companies above as well. 6. The learned Counsel for the assessee reiterated the submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has not affected the financial results of the company for the relevant A.Y. Therefore, respectfully following the decision of the Coordinate Benches, particularly in the case of United Online Software Development (India) Pvt. Ltd (Supra), we direct the AO to exclude this company from the final list of comparable. 8. As regards Thirdware Solutions Ltd is concerned, the learned Counsel for the assessee had relied upon the decision of the Coordinate Bench i.e. B Bench in the case of Intoto Software India Pvt Ltd in ITA No.1196/Hyd/2010, dated 24.05.2013 for the A.Y 2005-06 wherein the Tribunal has taken note of the fact that Thirdware Solutions Ltd is into both software services as well as product development. The Tribunal at Para 25 26 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rejected this ground on the ground that it was taken for the first time before him. The learned Counsel for the assessee submitted that the appeal before the CIT (A) is continuation of the assessment proceedings and therefore, the CIT (A) ought to have considered the contention of the assessee on merits. 10. The learned DR however, objected to this contention. 11. Having regard to the rival contentions and the material on record, we find that in a number of cases, this Tribunal has held that the adjustment towards underutilization has to be allowed for determination of the ALP. In the case of ACIT vs. Moschip Semi Conductor Technologies Ltd in ITA No.70/Hyd/ 2015, dated 22.09.2017, we have directed the AO to allow the adjustment for u ..... X X X X Extracts X X X X X X X X Extracts X X X X
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