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TMI Blog2016 (3) TMI 1442X X X X Extracts X X X X X X X X Extracts X X X X ..... d amount. So, the same is rightly treated as part of operating income. M/S. CISCO SYSTEMS (INDIA) PRIVATE LTD. [ 2014 (11) TMI 849 - ITAT BANGALORE] , SAP LABS INDIA (P.) LTD.[ 2010 (8) TMI 676 - ITAT, BANGALORE] AND M/S. GEM PLUS JEWELLERY INDIA LTD. [ 2010 (6) TMI 65 - BOMBAY HIGH COURT] . Deduction u/s 10A - exclusion of Telecommunication Charges for export turnover and total turnover - HELD THAT:- AO excluded the Telecommunications charges and Travelling charges from estimated turnover. Ld.CIT(A) following the Co-ordinate Bench decision has directed the AO to exclude the same from total turnover as well. This direction is as per the principles on the subject. The jurisdictional High Court in the case of CIT Vs. Tata Elxsi [ 2011 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng filter applied by the TPO is necessary to exclude companies which do not have the same or comparable financial cycle as the tested party. 6. The learned CIT(A) on the facts and in the circumstances of the case, erred in rejecting M/s. Accentia Technologies Ltd., as a comparable in the case of the taxpayer, holding that events of acquisitions and amalgamations has impacted its profitability. 7. The learned CIT(A), on the facts and in the circumstances of the case, erred in directing the AO to delete M/s. Genesys International Corporation Ltd., from the final set of comparables in the ITES segment. 8. The learned CIT(A) on the facts and in the circumstances of the case, erred in holding that the set of 10 companies listed by him s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecting assessee s TP study undertook fresh search with various filters and after giving opportunity to assessee, finally selected the following 20 companies as comparables with an arithmetic mean of 24.75%. Sl. No. Company name Margin as per TPO s order (%) 1. Accentia Technologies Limited 41.77 2. Acropetal Technologies Limited 35.30 3. Allsec Technologies Limited -13.29 4. Asit C Mehta Financial Services Limited 9.42 5. Caliber Point Busi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Arithmetic mean 24.75 TPO proposed an adjustment of Rs. 2,98,73,059/- on a receipt of Rs. 41.39 Crores. AO issued draft order accordingly. While completing assessment, the AO also reduced the claim u/s. 10A by an amount of Rs. 10,75,453/- after adjusting the export turnover by reducing expenditure under the head telecommunications, freight and insurance. Assessee did not prefer objections before DRP but preferred an appeal before Ld.CIT(A). Ld.CIT(A) after considering the detailed objections has given relief to assessee. 3. Ld.CIT(A) in his order has considered the following: Transfer Pricing matters: i. The learned CIT(A) applied a turnover filter of Rs. 1 Crore to Rs. 200 Crores based on B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s directed the AO to re-compute the margins of both assessee as well as comparable companies listed by including the foreign exchange gains or losses in operational costs. Corporate tax matters: The CIT(A), following the judgment given by the jurisdictional High Court in the case of CIT Vs. Tata Elxsi Ltd., [349 ITR 98] (Kar) has directed the AO to reduce the telecommunication expenses, insurance expenses, freight and foreign currency travel expenses the communication expenses from both export turnover as well as total turnover and re-compute the deduction u/s. 10A. 3.1. Aggrieved on the order of Ld.CIT(A) present appeal was preferred by Revenue. Assessee is not in appeal as informed by Ld. Counsel. 4. Ground No. 2 on diminis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vide para 24 25, these two companies are considered and excluded. iii.Accentia Technologies Limited (Seg) Merger of company effecting the profits. iv.Eclerx Services Limited Involved in data management services acquired companies during the year. v.Genesys International Corporation Limited Engaged in high end Global Information System Services, photo geometry. vi.Mold-Tek Technologies Limited Provides high-end structural engineering KPO services. Acquired company and demerger during the year. vii.Coral Hubs Limited Engaged in E-publishing busine ..... X X X X Extracts X X X X X X X X Extracts X X X X
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