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TMI Blog2022 (3) TMI 338X X X X Extracts X X X X X X X X Extracts X X X X ..... inal set of comparables. Thirdware Solutions Limited cannot be included in the final list of comparables - As we note that this Tribunal directed the AO/TPO for detailed factual verification based on annual report and other relevant documents in order to verify nature and scope of functions of Thirdware Solutions Limited. The ld. DR agreed for remand the said issue to the file of AO/TPO for its fresh verification in terms of direction rendered by this Tribunal in assessee s own case in A.Y. 2012-13. Accordingly, we direct the AO/TPO follow the same direction as contained in order [ 2021 (5) TMI 481 - ITAT PUNE] for A.Y. 2012-13. Thus, the additional ground raised by the assessee is allowed for statistical purpose. Seeking deduction paid towards Education Cess under Finance Act while computing the taxable income - HELD THAT:- We note that the assessee paid Education Cess while computing the taxable income. The Hon ble High Court of Bombay in the case of Sesa Goa Ltd [ 2020 (3) TMI 347 - BOMBAY HIGH COURT ] was pleased to hold that the Education Cess is an allowable expenditure as per the provision of the I.T. Act - We direct the AO to allow deduction in respect of Education ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aged in providing software development and software consultancy services to its AEs during the year under consideration. For the sake of convenience these services hereinafter called as software services. The total value of provision of software development support and consultancy services is ₹ 88,02,72,835/-. The assessee selected TNMM as the most appropriate method to benchmark the international transactions of software services. The assessee worked out its PLI margin by OP/OC at 10.78% and shown the PLI margin of comparables by OP/OC at 10.01%. The assessee used filters to exclude comparable companies non availability of descriptive information, ceased business operations, sick and persistent negative net worth, different functions, having turnover less ₹ 1 crore or more than 200 cores, having less than 25% foreign exchange, in excess of 25% transactions with related parties, persistent operating losses, exceptional years of operations and merged to form another company. 8. In terms of the above filters the assessee selected 18 companies as comparables, the details of which reproduced at Page Nos. 7 and 8 of the TPO s order. The TPO also by invoking Rule 10B(4) ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al, data, specification, tape, or program, or any confidential information provided to the consultant in connection with this agreement. Further, we note that the consultant shall invoice the institute each month for the previous month s services and expenses or upon completion of the services, whichever occurs earlier. We find an invoice at Page No. 976 of the paper book which is similar to the invoice reflecting in Page No. 191 of the paper book. Further, we note that the details of activities are provided at Page No. 978 of the paper book wherein the assessee has been shown as vendor and the Institute has been shown as recipient of the said activities and invoice also raised on the name of SAS Institute based in USA. Invoice at Page No. 980 shows the value of services for the month of May, 2012 and its break up is at Page No. 981 of the paper book showing the same amount reflected in Page No. 980 to an extent of $863,552.44. Likewise another invoice is placed at Page No. 982 raised on SAS Institute by the assessee for the services in the month of July, 2012 and its break up of value of services is placed at Page No. 983 of the paper book. Likewise, the assessee submitted invoice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal set of comparables. The ld. DR did not dispute the same nor placed on record any view contrary to the decision of the Tribunal in assessee s own case for A.Y. 2012-13. Having considering the facts and circumstances of the case and the discussion made by us here-in-above following the same findings as rendered by the CO-ordinate Bench of Tribunal in assessee s own case for A.Y. 2012-13, we direct the AO/TPO to exclude Infobeans Systems Private Limited from the final set of comparables. Thus, the ground No. 9 raised by the assessee is allowed. 11. In ground No. 12, the assessee has assailed initiation of penalty proceedings u/s. 234B, 234C and 271(1)(c) of the Act, in our opinion, challenge to penalty proceedings at this stage is premature. Accordingly, ground No. 12 raised in the appeal is dismissed. 12. The assessee raised additional ground No. 13 for exclusion of Thirdware Solutions Limited from the list of comparable companies. We note that the assessee selected the Thirdware Solutions Limited as one of the comparable which was accepted by the TPO. It was submitted by the ld. AR that the assessee did not dispute the inclusion of Thirdware Solutions Limited before the CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a) was pleased to hold that the Education Cess is an allowable expenditure as per the provision of the I.T. Act. The relevant portion of the order of Tribunal in ITA No. 1578/PUN/2017 for A.Y. 2011-12 in the case of M/s. Advik Hi-Tech Pvt. Ltd. is reproduced here-in-below for ready reference : 12. The assessee has also preferred additional ground which reads as follows: The Ld. AO be directed to allow deduction of ₹ 12,91,464/- paid towards Education Cess under Finance Act while computing the taxable income under normal provision of the IT Act. 13. We find that this issue is squarely covered by the decision of the Hon ble Bombay High Court in the case of Sesa Goa Limited Vs. The Joint Commissioner of Income Tax, Tax Appeal No.17 of 2013 wherein it has been observed and opined by the Hon ble Bombay High Court as follows: 22. Applying to the aforesaid principles, we find that the legislature, in Section 40(a)(ii) has provided that any rate or tax levied on profits and gains of business or profession shall not be deducted in computing the income chargeable under the head profits and gains of business or profession . There is no reference to any cess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Hon ble High Court on this issue held the said question No.3 is answered in favour of the assessee. For the sake of completeness, the said Paragraph is extracted as under: 12. We have heard consel for the parties. On the third issue in appeal no.52/2018, in view of the circular of CBDT where word Cess is deleted, in our considered opinion, the tribunal has committed an error in not accepting the contention of the assessee. Apart from the Supreme Court decision referred that assessment year is independent and word Cess has been rightly interpreted by the Supreme Court that the Cess is not tax in that view of the matter, we are of the considered opinion that the view taken by the tribunal on issue no.3 is required to be reversed and the said issue is answered in favour of the assessee. From the above, it is evident that education Cess, which is not disallowable item, on its payment, the cess is an allowable expenditure as per provision of section 40(a)(ii) of the Act. Considering the settled nature of the issue as per the ratio laid down in the above referred case by the Hon ble High Court of Judicature for Rajasthan Bench at Jaipur, ground of Cross objection No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g contrary to the material evidence against the view of CIT(A) and we uphold the direction of CIT(A) in directing the AO to include the M/s. Lucid Software Limited as comparable in the final list of comparable companies. 20. Likewise the TPO and CIT(A) rendered the same view as expressed in M/s. Lucid Software Limited in respect of Evoke Technologies Private Limited also, wherein we note that the TPO did not discuss any specific ground for non-acceptance of Evoke Technologies Private Limited as comparable company and the CIT(A) directed the AO/TPO to include the same as comparable companies on the services rendered by that company as reflected in annual report. Further, we find, that the TPO accepted the same as comparable in assessee s own case for A.Y. 2012-13. The ld. AR referred the chart and contended that Evoke Technologies Private Limited should be considered as comparable in view of the finding of TPO in earlier order concerning A.Y. 2012-13. On perusal of the impugned order at Para No. 2.2.1.5.1 to 2.2.1.5.3 we note that the CIT(A) observed that the TPO accepted Evoke Technologies Private Limited in A.Y. 2012-13. The CIT(A) on its satisfaction and examination of annual ..... X X X X Extracts X X X X X X X X Extracts X X X X
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