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TMI Blog2020 (12) TMI 1193X X X X Extracts X X X X X X X X Extracts X X X X ..... CHENNAI] - The above said decision was rendered by Chennai Bench of Tribunal in the context of Section 115JB only. The Ld A.R. also submitted that the assessee that the assessee has actually paid the bonus in the succeeding year. Accordingly, we hold that the provision for bonus created by the assessee is an ascertained liability. Accordingly, we set aside the order passed by Ld. CIT(A) on this issue and direct the A.O. to exclude it from book profit. Disallowance u/s. 14A - A.O. computed the disallowance by applying rule 8D(2)(iii) of I.T. Rules - HELD THAT:- Since the provisions of Rule 8D has been held to be prospective in nature, i.e., from AY 2008-09 onwards, the tax authorities are not justified in applying the same to the assessment year under consideration. However, the provisions of sec. 14A shall apply to the exempt income. Hence the disallowance u/s. 14A should be made on a reasonable basis. Hon'ble Bombay High Court, in the case of Godrej Agrovet Ltd. [ 2014 (8) TMI 457 - BOMBAY HIGH COURT] has upheld disallowance of 2% of the dividend income to meet the requirements of sec. 14A prior to insertion of Rule 8D. Accordingly, we set aside the order passed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee, the CIT(A) finalised a list of twelve comparable companies as given below. 1. Geometric Software Solutions Co. Limited 2. Bodhtree Consulting Limited 3. Flextronics Software Systems Limited (Seg.) 4. Tata Elxsi Limited (Seg.) 5. Sasken Communication Technologies Limited (Seg.) 6. Visual Soft Technologies Limited (Seg.) 7. Goldstone Technologies Limited 8. Akshay Software Technologies Limited 9. Gebbs Infotech Limited 10. GTL Limited 11. ICSA (India) Limited 12. LGS Global Limited (Lanco Global Solutions Limited) Accordingly, he modified the transfer pricing adjustment made by the AO. 6. In the appeal filed before us, the assessee seeks exclusion of following four companies: 1. Geometric Software Solutions Co. Limited 2. Bodhtree Consulting Limited 3. Flextronics Software Systems Limited (Seg.) 4. Tata Elxsi Limited (Seg.) 7. The Ld. A.R. submitted that all the above said four companies have been excluded by the coordinate bench in the case of Sharp Software Development India Pvt. Ltd.(IT(TP)A No. 1109/Bang/2011 dated 25.1.2017 relating to assessment year 2005-06). 8. We heard Ld D.R. and pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons filter: As per schedule 4 of the balance sheet, the company has investments in Perigon, LIC, USA and as per the response u/s. 133(6); the company has export sales to Perigon LIC, USA of ₹ 133.90 lakhs, being 34.68% of the total turnover. IT(TP)A No. 1109/Bang/2011 CO 13/Bang/2012 Page 16 of 33 Functionally different filter: The company in its response to notice u/s. 133(6) has stated that it provides e-paper solutions, data cleansing software, website development and other customized software and also state that the e-paper solutions and data cleansing services would come under the category of IT enabled services Considering the above, we direct that the above company has to be excluded on the reason of RPT of more than 25% and functionality. 3. Flextronics Software Systems Ltd.,: 10.10. This company was objected to on functional dissimilarity. This was considered in ITO Vs. M/s. Sunquest Information Systems (India) Private Limited, in IT(TP)A No. 1302/Bang/2011 dt. 11-06-2015 (supra) as under: 26. As far as Flextronics Software Limited is concerned, we find that at page 90 of his Order, the TPO has also observed that IT(TP)A No. 1109/Bang/2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reply of Tata Elxsi Limited to the Addl. CIT (Transfer Pricing), Hyderabad, wherein the concerned Officer has been informed that Tata Elxsi Limited is specialised Embedded Software IT(TP)A No. 1109/Bang/2011 CO 13/Bang/2012 Page 22 of 33 Development Service Provider and that it cannot be compared with any other software development company. It was submitted that because of the specialisation and also because of diverse nature of its business, it is very difficult to scale-up the operations of Tata Elxsi Limited. In view of this, Tata Elxsi Limited has informed that it is not fair to use its financial numbers to compare it with any other company. The communication dated 25th August, 2009 to the TPO is placed before us. As this communication was not before the TPO at the time of transfer pricing adjustment we deem it fit and proper to remand this issue also to the file of the TPO to reconsider adopting this company as the comparable in the light of observations of this company to the TPO in the case of another Assessee. In the result, the Assessing Officer/TPO is directed to reconsider the issue in accordance with law, after affording a reasonable opportunity of being heard to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he purpose of computing book profit u/s. 115JB of the Act. Accordingly, the A.O. added the same to the net profit. The Ld. CIT(A) also confirmed the same. 10. The Ld. A.R. submitted that the assessee has provided for bonus payable by it as at the year end as per the accounting principles followed by the assessee, since it is a known liability. He further submitted that the assessee had paid the above said amount of bonus in the succeeding year. Accordingly, he submitted that the provision for bonus cannot be considered as contingent liability. 11. We heard Ld. D.R. on this issue and perused the record. We notice that the nature of liability in respect of provision for bonus was examined by Chennai bench of Tribunal in the case of ACIT Vs. Sun Paper Mills Ltd. (ITA No. 806/MDS/2011 dated 14.7.2011) and it was decided as under: We find that the provision made by the assessee towards bonus was not an unascertained liability. The assessee was bound to pay bonus to its employees and in fact the bonus was actually paid by the assessee company. The only thing is that the bonus was paid after the close of the previous year. The Hon'ble Supreme Court in the case of Bharat E ..... X X X X Extracts X X X X X X X X Extracts X X X X
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