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TMI Blog2023 (4) TMI 981X X X X Extracts X X X X X X X X Extracts X X X X ..... that the dividend has been received from the said units. The said unit has also been sold during the year under consideration. Activities carried on by the assessee in the investment portfolio, we are of the view that an adhoc disallowance of Rs. 30,000/- may be made under section 14A of the Act and, in our view, the same would meet the requirement of section 14A . Appeal filed by the assessee is partly allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... contentions and perused the record. We noticed that the Coordinate Bench in the case of M/s. Deutsche Networking Services Private Limited (supra) has held that the above said 3 companies are not good comparable companies for a company providing back-end processing services. For the sake of convenience we extract below the relevant portion of the order passed by the Tribunal in the above said case :- "(IV). GOLDSTONE INFOTECH LTD. (Formerly known as: Goldstone Tele Services Ltd):- 15. The ld. A.R submitted that the TPO had rejected the comparables selected by the assessee by applying the export filter and had excluded the companies which had an export sale of less than 25%. The ld. A.R in order to fortify his aforesaid contention drew our attention to Page 4 of the order passed by the TPO wherein two comparable selected by the assessee viz. (i) M/s Ask Me Info Hubs Ltd.; and (ii) M/s CMC Ltd. were rejected by him for the reason that their respective export sales were less than 25% of the total sales. In the backdrop of the aforesaid facts, it was the contention of the ld. A.R that the revenue generated by the aforementioned company viz. M/s Goldstone Infratech Ltd. during the y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We are of the considered view that in the backdrop of the aforesaid fact that the export sales of the aforesaid company viz. M/s Goldstone Infotech Ltd. is found to be substantially less than 25% of its total sales, thus a different basis for selection of the same as a comparable by the TPO in disregard of the export filter which was applied by him while rejecting the comparables selected by the assessee company would not be permissible. We thus, being of the considered view that as the export turnover of the aforementioned company viz. M/s Goldstone Infratech Ltd. is found to be substantially less than 25% of its total sales, therefore, the same as per the export filter applied by the TPO for analysing the functional comparability of the comparables selected by the assessee could not have been taken as a comparable for benchmarking the international transactions of the assessee with its AE's. On the basis of our aforesaid observations we direct the AO/TPO to exclude M/s Goldstone Infratech Ltd. from the final list of comparables. (V). MAPLE eSOLUTIONS LTD: 17. The ld. A.R adverting to the functional comparability of the aforementioned company submitted, that it was during t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the ld. D.R that as the aforementioned company viz. M/s Maple eSolutions Ltd. was functionally comparable to the assessee, thus it was rightly selected by the TPO as comparable for benchmarking the international transactions of the assessee with its AE's. 18. We have heard the authorized representatives of both the parties, perused the orders of the lower authorities and the material available on record in context of the issue pertaining to selection of the aforementioned company viz. M/s Maple eSolutions Ltd. as a comparable by the TPO. We find from a perusal of the order passed by the TPO under Sec. 92CA(3) in the case of the assessee for A.Y 2008-09 that the aforementioned company viz. M/s Maple eSolutions Ltd. was rejected as a comparable by him interalia for the reason that no separate segmental data in respect of ITeS sector were available. Still further, the CIT(A) while disposing of the appeal of the assessee for A.Y 2007-08, taking cognizance of the fact that there was no change of facts during the year as in comparison to A.Y 2008-09, had thus directed that the said company be excluded from the final set of comparables. We have further perused the order passed by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filter while analysing the comparables selected by the assessee, therefore, in the backdrop of the fact that the aforementioned company viz. M/s Datamatics Financial Services Limited had a RPT of more than 25%, the same was liable to be excluded from the final list of comparables. Per contra, the ld. D.R relied on the orders passed by the A.O/TPO and submitted that no infirmity did emerge from selection of the aforementioned company which after necessary deliberations was found to be functionally comparable with the assessee. 20. We have heard the authorized representatives for both the parties, perused the orders of the lower authorities and the material available on record in context of selection of the aforementioned company viz. M/s Datamatics Financial Services Limited as a comparable by the TPO for benchmarking the international transactions of the assessee with its AE's. We find that the Tribunal in its order passed in the case of the M/s Stream International Services ltd. Vs. ADIT (International Taxation)-7(2), Mumbai [ITA No. 8997/Mum/2010, dated 11.01.2017] for A.Y 2006-07, had observed that as the RPT of the aforementioned company viz. Datamatics Financial Services Li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs Ltd. (2018) 401 ITR 445. 10. The Learned DR, on the contrary, submitted that the assessee has earned exempt income and hence disallowance is required to be made under section 14A of the Act. He submitted that the disallowance of Rs.4.03 lakhs would meet the requirements of Sec. 14A of the Act. 11. In the rejoinder, the Ld A.R submitted that the assessee has received only dividend income from mutual funds and hence the disallowance of Rs.4.03 lakhs will be very much on the higher side. 12. We have heard the rival contentions on this issue and perused the record. We agree with the contention of learned AR that the provisions of Rule 8D cannot be applied during the year under consideration, i.e., AY 2006-07, as per decision rendered by Hon'ble Jurisdictional Bombay High Court and Hon'ble Supreme Court (referred supra). At the same time we also agree with the contention of learned DR that some disallowance is called for, since the assessee would not have earned exempt income without incurring some expenditure. We perused the balance sheet of the assessee and noticed that the assessee held mutual fund units of Grindlays Cash Fund to the tune of Rs. 4.59 crore as at the be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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