| The Tax Publishers2021 TaxPub(DT) 3816 (Bang-Trib) INCOME TAX ACT, 1961
Section 92C
In view of decision rendered in case of Dy. CIT v. Quark Systems (P.) Ltd. [(2010) 38 SOT 307 (Chd-Trib) (SB) : 2010 TaxPub(DT) 907 (Chd-Trib)], wherein it was held that assessee cannot be precluded from seeking exclusion of a company selected by it in its TP study, when the company is otherwise not comparable to the assessee, AO was directed to exclude the 5 companies Chosen by the TPO namely (1) L & T Infotech Ltd., (2) Persistent Systems Ltd., (3) Tech Mahindra Ltd., (4) Mindtree Ltd. and (5) RS Software India Pvt. Ltd. from the list of comparable companies.
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Transfer pricing - Computation of ALP - Benchmarking of comparables - Application of turnover filter
Assessee filed appeal against the order of TPO seeking exclusion of 5 comparable companies Chosen by the TPO namely (1) L & T Infotech Ltd., (2) Persistent Systems Ltd., (3) Tech Mahindra Ltd., (4) Mindtree Ltd. and (5) RS Software India Pvt. Ltd. by application of Turnover Filter with regard to determination of ALP in respect of the rendering software development services to the associate enterprise. Held: As far as excluding the companies on the basis of turnover was concerned, the issue had been elaborately discussed by this Tribunal in the case of Autodesk India Pvt. Ltd. v. Dy. CIT [IT(TP)A Nos. 540 & 541/Bang/2013, order dt. 06-7-2018: 2019 TaxPub(DT) 1523 (Bang-Trib)]. The Tribunal in this decision after review of entire case laws on the subject, considered the question, whether companies having turnover of more than Rs. 200 crores upto Rs. 500 crores had to be regarded as one category and those companies cannot be regarded as comparables with companies having turnover of less than Rs. 200 crores. Following the same AO was directed accordingly. Further, assessee cannot be denied the right to seek its exclusion before the Tribunal and in this regard assessee had rightly placed reliance on the decision in the case of Dy. CIT v. Quark Systems (P.) Ltd. [(2010) 38 SOT 307 (Chd-Trib)(SB) : 2010 TaxPub(DT) 907 (Chd-Trib)] for the proposition of law that the assessee cannot be precluded from seeking exclusion of a company selected by it in its TP study, when the company is otherwise not comparable to the assessee. Therefore, AO was directed to exclude the 5 companies Chosen by the TPO namely (1) L & T Infotech Ltd., (2) Persistent Systems Ltd., (3) Tech Mahindra Ltd., (4) Mindtree Ltd. and (5) RS Software India Pvt. Ltd. from the list of comparable companies.
Followed:Autodesk India Pvt. Ltd. v. Dy. CIT [IT(TP)A No. 540 & 541/Bang/2013, order dt. 06-7-2018: 2019 TaxPub(DT) 1523 (Bang-Trib)] and Dy. CIT v. Quark Systems (P.) Ltd. [(2010) 38 SOT 307 (Chd-Trib) (SB) : 2010 TaxPub(DT) 907 (Chd-Trib)].
REFERRED :
FAVOUR : In assessee's favour.
A.Y. : 2013-14
IN THE ITAT, BANGALORE BENCH
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