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TMI Blog2020 (3) TMI 1444X X X X Extracts X X X X X X X X Extracts X X X X ..... whose the turnover is Rs.5.31 Crores and functionally dissimilar and is also engaged in product sales., directed to be excluded from the final list of comparables for determination of ALP. Disallowance of software expenditure under Section 37 - AO has treated as capital expenditure and no depreciation was allowed - HELD THAT:- We on perusal of the draft assessment order passed by the Assessing Officer found that the assessee has filed the details of software expenses but the A.O s observations that the assessee is not in a position to show that it was put to use during the year and no documentary proof was submitted to substantiate the usage of software. DRP observed that the assessee has failed to prove the corresponding assets we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Section 144C(5) Dt.25.09.2018. 2. At the time of hearing, the learned Authorized Representative has pressed Grounds of appeal Nos.14, 16 17 only and made endorsement in the appeal memo. Hence, other grounds of appeal are not pressed and treated as withdrawn and dismissed. The effective grounds of appeal are as under: 3. The Brief facts of the case are that the assessee company is engaged in business of providing software development services of electric integrated circuits to its parent company and filed the Return of Income for the Asst. Year 2006-07 on 30.11.2006 with total income of Rs.24,52,123/-.Subsequently,the case was selected for scrutiny. The Assessing Officer found that the assessee has international transact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cel Transmatics Limited and Mega Soft Limited and sought for marked risk adjustments. Whereas the TPO has selected the final list of comparables as under : 4. The TPO computed the ALP in order at page 6 Para 4 as under : 5. The TPO has passed the order under Section 92CA r.w.s. 254 of the Act dt.20.10.2017 and the draft assessment order was passed by the Assessing Officer under Section 143(3) r.w.s. 144C r.w. 254 of the Act along with Transfer Pricing Adjustment and the addition in respect of software expenditure and assessed the total income of Rs. 13,76,81,822. Aggrieved by the order, the assessee has filed objections in Form 35A before the DRP, whereas the DRP has passed the order under Section 144C (5) of the Act dt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.96 Crores and is functionally different and engaged in software products and training apart from provision of Software Development Services. d) Persistent Systems Limited - The company turnover is Rs.2.917 Crores and it is functionally dissimilar and fails the upper turnover filter. e) Tata Elxsi Limited - The company has turnover of Rs.235.63 Crores and functionally dissimilar, and is engaged in product development activity which include Multi Media Imaging Process and involved in activities such as hardware design, industrial design, engineering design and visual computing. 8. Further the learned Authorized Representative submitted that these comparable companies were excluded by the co-ordinate bench of this Tribunal i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r contentions were raised alternatively, if the software expenditure is not allowed as revenue expenditure, than depreciation has to be allowed. We on perusal of the draft assessment order passed by the Assessing Officer found that the assessee has filed the details of software expenses by letter dt. 29.11.2017 but the A.O s observations that the assessee is not in a position to show that it was put to use during the year and no documentary proof was submitted to substantiate the usage of software. Further the DRP has dealt in its order at page 27 para 2.27.1 and observed that the assessee has failed to prove the corresponding assets were put to use by the end of the financial year and therefore depreciation was not allowed. Even before us, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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