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TMI Blog2017 (5) TMI 1728X X X X Extracts X X X X X X X X Extracts X X X X ..... regard to its claim for working capital adjustment. Assessee appeal allowed for statistical purposes. X X X X Extracts X X X X X X X X Extracts X X X X ..... month from today.' 2. Ld. DR submitted that reasons given as sufficient cause for delay in filing the appeal are not such which were beyond the control of the assessee. He submitted that delay cannot be condoned in anticipation of benefits. In this regard, he relied on the decision in the case of Office of the Chief Post Master General v. Living Media India Ltd. [2012] 348 ITR 7/207 Taxman 163/20 taxmann.com 347 (SC). The ld. DR further relied on the decision in the case of J.B. Advani & Co. (P.) Ltd. v. R.D. Shah, CIT [1969] 72 ITR 395 (SC) and submitted that every day delay has to be explained. 3. We have considered the submissions of both the parties and have perused the case record. The issue is adjustment in regard to international transaction related to software development segment of the assessee. Various comparables have been taken into consideration for determining the arm's length price (ALP). Therefore, it cannot be denied that this issue permeates through all the years and, therefore, if in one year on account of wrong advice of the counsel appeal is not preferred in time, then, the adverse finding for that year should not prejudice the assessee's claim fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p. Frankly speaking these situations may not be so relevant to the service industry. The assessee, as also the comparables used, shall launch into a project only when they have been awarded a contract. It is not as if these parties have manufactured goods that await buyers. This being the case, there is a serious question on the very need for a working capital adjustment in the service industry. A working capital adjustment will be required only when the varying levels of the working capital deployed is actually making a difference to the margins earned by the assessee and the comparables. This is actually at the heart of every comparability adjustment. The assessee has not been able to demonstrate that the difference in the working capital deployed is making a difference in the margin earned by the assessee and the comparables in this year." 7. The assessee has assailed the final assessment order primarily on two counts. Firstly, the assessee is aggrieved by inclusion of Kals Information Systems Ltd., in the list of comparables for determining the ALP of the international transaction relating to software development segment. The second grievance of the assessee is on account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... related services. The production and sale of such software is not capable of being expressed in any generic unit and hence it is not possible to give the quantitative details of the sales and information as required under paragraphs 3, 4C and 4D of Part II of Schedule VI of the Companies Act, 1956." 10. With reference to the above statement in the financial statement, ld. DR submitted that exclusion of Kals Information Systems Ltd., on the ground of dealing in products is not justified. 11. We have considered the submissions of both the parties and have perused the record of the case. The ld. counsel has relied on the following decisions in support of its contention that Kals Information Systems Ltd., is not to be included in the set of comparables:- (i) Toluna India (P) Ltd. v. Asstt. CIT [2014] 50 taxmann.com 24/151 ITD 177 (Delhi-Trib); (ii) Cincom Systems India (P.) Ltd. v. ACIT [ITA No.761(Delhi) of 2012, dated 31-5-2013); (iii) Telelogic India (P) Ltd. v. Dy. CIT [2015] 58 taxmann.com 364/69 SOT 135 (Mum.-Trib) 12. In the case of Toluna India (P) Ltd. (supra), the Tribunal has noticed that the assessee rendered software development and related services to Greenf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5-186 of the Paper Book from the website of the company to establish that it is engaged in providing of I T enabled 9 services and that the said company is into development of software products, etc. All these aspects have not been factually rebutted and, in our view, the said concern is liable to be excluded from the final set of comparables, and thus on this aspect, assessee succeeds." 9.3. Above bind view case has been followed in the case of Trilogy EBusiness Software India (P.) Ltd. v. DCIT [2013] 29 taxmann.com 310, ITA No 1054/2011; the Bangalore Bench of ITAT has held: "46. As far as this company is concerned, the contention of the assessee is that the aforesaid company has revenues from both software development and software products. Besides the above, it was also pointed out that this company is engaged in providing training. It was also submitted that as per the annual repot, the salary cost debited under the software development expenditure was ₹ 45,93,351. The same was less than 25% of the software services revenue and therefore the salary cost filter test fails in this case. Reference was made to the Pune Bench Tribunal's decision of the ITAT in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ia, but still it is a common experience that in many such results certain expenditures, particularly expenditure on account of interest and head office, are generally not allocated and shown in the published results as separate expenditure. Therefore, the TPO was correct that when direct comparables were available there was no need to consider the segmented results of TCI. It is only the operating profit which can be considered. It is important to note that in this case it was the department's contention that segmented results should not be considered when direct comparable are available. As in assessee's the direct comparable are available, hence KALS Information Systems Ltd should not be taken as comparable." 16. The Tribunal noticed that Kals Information Systems Ltd., consisted of an STPI unit engaged in development of software and software products and training centres engaged in training of software professional for online projects. Further, in Telelogic India (P) Ltd., the Tribunal, inter alia, observed that the assessee was engaged in the business of development of software and maintenance of data for software for its parent company in assessment year 2006-07 a ..... 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