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TMI Blog2020 (8) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... the above decision of Maxopp Investment Ltd .[2018 (3) TMI 805 - SUPREME COURT] we delete the disallowance made by the AO. X X X X Extracts X X X X X X X X Extracts X X X X ..... 14A offered by the Appellant having regard to the accounts of the assessee. 2.3 Without prejudice to the above ground, the AO has erred in incorrectly applying the provision of rule 8D by not excluding the investments which was producing partly taxable income and partly exempt income. 2.4 In view of the above, the additional disallowance of ₹ 17,48,571/- made u/s 14A r.w. Rule 8D be deleted. 3. Briefly stated, the facts of the case are that the appellant filed its return of income for the assessment year (AY) 2008-09 on 27.09.2008 showing income of ₹ 56,13,59,411/- under the normal provisions and ₹ 54,94,24,812/- u/s 115JB of the Act. It is engaged in trading of the networking products and in providing services such as training, maintenance, installation, consultancy, facility management, outsourcing and systems integration in the area of information communication systems and computer networking and computer hardware and software. The appellant is a part of Datacraft group which is engaged in providing IT services and solution that helps clients plan, build, support and manage their IT infrastructures. During the year under consideration, the appellant repo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sr. No. Company Name NCP % 1. Accentia Technologies Ltd. 41.76 2. Acropetal Technologies (seg) 35.30 3. Asit C. Mehta Financial services Ltd. 9.42 4. Caliber Point Business Solutions Ltd. 10.97 5. Cosmic Global Ltd. 23.30 6. Cross Domain Solutions Ltd. 26.96 7. Datamatics Financial Services Ltd. (seg) 34.87 8. E4e Healthcare Solutions 16.72 9. IServices India Pvt. Ltd. 9.58 10. Mold-Tek Technologies Ltd. Subject to the observation that if satisfies the filter export earnings >75% 96.66 11. R Systems International Ltd. (Seg.) 4.30 12. Spanco Ltd. (Seg.) 11.04 Based on the above direction of the DRP, the AO reduced the adjustment from ₹ 83,98,618/- to ₹ 66,21,701/-. 4. Before us, the Ld. counsel for the appellant submits that Accentia Technologies Ltd. and Cosmic Global Ltd. are to be excluded from the list of comparables selected by the AO in view of the decision of the order of the Hon'ble Bombay High Court in the case of PCIT v. Aptara Technology (P.) Ltd. for AY 2008-09 reported in 303 CTR 805. Further, it is stated by him that Accentia Technologies Ltd., Mold Tek Technologies Ltd. and Acropetal Technologies Ltd. are to be ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and has not impacted the operation of the company. Further, it is explained by him that the DRP has rightly rejected the contentions of the appellant that foreign exchange loss (derivative loss) should be considered as operating in nature, as these expenses are not incurred on account of the functional operations of the company. 6. We have heard the rival submissions and perused the relevant materials on record. The reasons for our decisions are given below. In Aptara Technology (P.) Ltd. (supra), the Hon'ble Bombay High Court has held in case of Accentia Technologies Ltd. that the Tribunal has after rendering a finding of fact that the activities of the tested party and comparable are functionally different, also records a finding of fact that extraordinary event such as merger/amalgamation would have an impact/effect on the profitability of M/s Accentia Technologies Ltd.; therefore, on both the above grounds, it was held to be not a comparable to the transaction of the respondent (Aptara) with its AE. Further, in Aptara Technology (P.) Ltd. (supra) by the Hon'ble Bombay High Court has confirmed the order of the Tribunal excluding Cosmic Global Ltd. as comparable after renderin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vice. The bench, therefore, excluded the company as a comparable to ITES / BPO segment. The Tribunal, Hyderabad Bench, in M/s. Market Tools Research Pvt. Ltd. v/s DCIT, following co-ordinate bench decision in Symphony Marketing Solutions India Pvt. Ltd. (supra) has also held that the company cannot be treated as comparable to a company performing ITES / BPO functions. As these decisions rendered by the Tribunal are for the very same assessment year, respectfully following the same, we direct exclusion of this company from the list of comparables." Similar view has been taken by ITAT 'J' Bench Mumbai in Capital India Pvt. Ltd. (supra) in respect of Mold Tek Technologies Ltd. and Acropetal Technologies Ltd.. Then we decide the issue of comparability of M/s Datamatics Financial Services Ltd. with the appellant. A perusal of the order dated 26.06.2013 passed by the Tribunal in the case of the above company for the AY 2008-09 clearly indicates that the assessee (M/s Datamatics Financial Services Ltd.) had not properly apportioned common expenses between the eligible and in eligible units. The Tribunal has confirmed the order of the taxing authorities in respect of apportionment of e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terials on record. In the case of Maxopp Investment Ltd. v. CIT (2018) 91 taxmann.com 154 (SC), the Hon'ble Supreme Court has held that : "41. Having regard to the language of Section 14A(2) of the Act, read with Rule 8D of the Rules, we also make it clear that before applying the theory of apportionment, the AO needs to record satisfaction that having regard to the kind of the assessee, suo motu disallowance under Section 14A was not correct. It will be in those cases where the assessee in his return has himself apportioned but the AO was not accepting the said apportionment. In that eventuality, it will have to record its satisfaction to this effect. Further, while recording such a satisfaction, nature of loan taken by the assessee for purchasing the shares/making the investment in shares is to be examined by the AO." In the instant case the AO has failed to record even elementary satisfaction that having record to the contentions of the appellant, suo motu disallowance of ₹ 6,00,000/- u/s 14A was not correct. Therefore, following the above decision of the Hon'ble Supreme Court, we delete the disallowance of ₹ 17,48,571/- made by the AO. 10. However, before we par ..... X X X X Extracts X X X X X X X X Extracts X X X X
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