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TMI Blog2018 (7) TMI 2331X X X X Extracts X X X X X X X X Extracts X X X X ..... ort turnover have to be excluded from total turnover also. Allocation of recruitment cost for Section 10A units deriving STPI and Non STPI units of the same Assessee is just and fair. We do not find any substantial question of law to be arising out of the said Order of the learned Tribunal. TP Adjustment - comparable selection - HELD THAT:- The controversy involved herein is no more res integra in view of the decision of this Court in M/s Softbrands India Pvt. Ltd. [ 2018 (6) TMI 1327 - KARNATAKA HIGH COURT] as held that the present appeals filed by the Revenue do not give rise to any substantial question of law and the suggested substantial questions of law do not meet the requirements of Section 260-A of the Act and thus the appeals filed by the Revenue are found to be devoid of merit and the same are liable to be dismissed. 57. We make it clear that the same yardsticks and parameters will have to be applied, even if such appeals are filed by the Assessees, because, there may be cases where the Tribunal giving its own reasons and findings has found certain comparables to be good comparables to arrive at an Arm s Length Price in the case of the assessees with which the assessees m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommon expenses without appreciating that the allocation of common expenses should be on a scientific basis and that all type of expenses cannot be allotted on head count basis and a mixture of turnover and head count basis should be adopted for allocation of expenses depending upon the nature of expenses ? 5. Whether the Hon'ble ITAT is justified in directing the AO to exclude lease line and interest expenses from both the export turnover and the total turnover for the purpose of deduction u/s 10A of the Act without appreciating the fact that there is no provision in section 10A that such expenses should be reduced from the total turnover, as clause (iv) of the Explanation 2 to section 10A provides that such expenses are to be reduced only from the export turnover ?" Regarding Substantial Question No.5: 3. The issue is covered by the decision of the Hon'ble Supreme Court in the case of Commissioner of Income-tax, Central - III vs. HCL Technologies Ltd., [2018] 93 Taxmann.com 33(SC). The relevant portion of the judgment of the Hon'ble Supreme Court in the case of HCL Technologies Ltd. (supra), is quoted below for ready reference:- "17. The similar nature of controversy, ak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated to STPI unit, income from which is eligible for deduction u/s 10A of the Act. The assessee is stated to be following head-count of personnel as the basis for allocation of the common and indirect expenses while the AO seeks to allocate the common expenses on the basis of the turnover of each segment. As narrated in the above paragraphs, the assessee is into various activities and the assessee is eligible for deduction u/s 10A of the Act only with regard to software development activity which is set up in STPI. The assessee had explained in detail before the AO the methodology and as to how the total expenditure of ₹ 207 crores has been bifurcated into ₹ 120 crores which is towards the common cost excluding IT and communication support cost and ₹ 87 crores which is common costs only in relation to IT and communication cost. The software development would fall within the second category i.e. IT and communication cost and its employees who are involved in such IT and communication are considered for allocation of the expenditure. The AO, in the draft assessment order, has considered number of employees in STPI and SEZ division and has come to the conclusion that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e AO. The assessee has given detailed explanation as to how it is allocating the expenditure between various units on the basis of head-count but both the AO as well as the DRP have failed to consider the factual aspects of the said submission. In view of the same, while upholding the method adopted by the assessee for allocation of common expenses, we remand the issue to the file of the AO only for verification of the number of employees and the expenditure allocated to such employees. Ground No.3 is accordingly allowed for statistical purposes." 5. The learned Tribunal, after discussing the rival contentions of both the Appellant-Revenue and Respondent-Assessee, has returned the findings as under: Regarding Substantial Question of Law No.1: "18. Having heard both the parties and having considered the material on record, we find that these two grounds need to be remitted to the file of the AP/TPO for re-computation of the ALP in the line of the directions of the Tribunal for the assessment year 2006-07. It is ordered accordingly. While considering this, the AO may also consider the voluntary TP adjustment of Rs.5 crore made by the assessee and give relief to the assessee, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon such exercise of framing and answering such substantial question of law. On the other hand, the appeals of the present tenor as to whether the comparables have been rightly picked up or not, Filters for arriving at the correct list of comparables have been rightly applied or not, do not in our considered opinion, give rise to any substantial question of law. 56. We are therefore of the considered opinion that the present appeals filed by the Revenue do not give rise to any substantial question of law and the suggested substantial questions of law do not meet the requirements of Section 260-A of the Act and thus the appeals filed by the Revenue are found to be devoid of merit and the same are liable to be dismissed. 57. We make it clear that the same yardsticks and parameters will have to be applied, even if such appeals are filed by the Assessees, because, there may be cases where the Tribunal giving its own reasons and findings has found certain comparables to be good comparables to arrive at an 'Arm's Length Price' in the case of the assessees with which the assessees may not be satisfied and have filed such appeals before this Court. Therefore we clarify that mere di ..... X X X X Extracts X X X X X X X X Extracts X X X X
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